Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

ABERYSTWYTH HARBOUR BILL

BRITISH RAILWAYS (STANSTED) BILL

Orders for Second Reading read.

To be read a Second time upon Thursday.

GREAT YARMOUTH OUTER HARBOUR BILL

IPSWICH PORT AUTHORITY BILL

Read a Second time, and committed.

PONTYPRIDD MARKETS FAIRS AND TOWN HALL BILL

Read a Second time and referred to the Examiners of Petitions for Private Bills.

TEIGNMOUTH QUAY COMPANY BILL

Order for Second Reading read.

To be read a Second time upon Thursday.

Oral Answers to Questions — SOCIAL SERVICES

Community Care

Mr. Blair: asked the Secretary of State for Social Services what progress has been made in implementing the recommendations of the second report of the Social Services Committee on community care.

Mr. Patchett: asked the Secretary of State for Social Services what progress has been made in implementing the recommendation on day care for the mentally ill of the second report of the Social Services Committee on community care.

The Minister for Health (Mr. Barney Hayhoe): The Committee's report and the Government response to it have made a valuable contribution to clarifying aims and encouraging progress in developing comprehensive local mental health services. Day hospital and day centre places have both increased in recent years, consistent with Government policy and priorities.

Mr. Blair: Does the Minister accept that there are still tremendous competing pressures on areas such as my own, where Winterton hospital is situated? The pressure is on the hospitals to release people into the community and on

the ground from people who want people put into hospitals, particularly elderly people. Does he agree that there is still a real danger that, in the name of community care, we are simply loading a burden off the state on to families that cannot cope?

Mr. Hayhoe: That is not the intention of successive Governments or of those who have studied the matter with great care. The whole concept of community care is not a cheap option; it is a desirable social policy. Of course, I appreciate that there are the difficulties to which the hon. Gentleman has referred.

Mr. Patchett: The report comments on the need for special care units for the severely handicapped. Will the right hon. Gentleman assure the House that he will not handicap local authorities which are already developing the units by any further cuts in the National Health Service, thereby perhaps discouraging other local authorities from taking the initiative that the report recommends?

Mr. Hayhoe: I accept that there is pressure on resources, but I must repudiate any suggestion that there have been cuts in the financial provision for the NHS. There have not been cuts; there have been increases in real terms over the period of this Government.

Mr. Galley: The policy of community care is obviously right for the patients, and my right hon. Friend is to be congratulated on the progress that has been made so far in implementing that policy. However, does he accept the Select Committee's concern that there should be individual care plans for everyone discharged from hospital, and is he taking steps to implement that recommendation?

Mr. Hayhoe: I believe that patients must be treated as individuals. To treat them in any way as groups is entirely wrong.

Mr. Heathcoat-Amory: Does my right hon. Friend know that the report also recognised that the fashion for community care has, in some respects, gone too far? Does he accept that many mental patients need continuing institutional care and should not be placed in the community, however alluring that phrase may sound?

Mr. Hayhoe: Of course a proper balance must be struck, but I believe that, generally speaking, the move from institutional care to community care is desirable. I think that anyone who knows about, for example, young children who have been kept in Victorian institutions and who have now been released into the community to a fuller and better life must see the advantages of the policy. Of course, that does not extend to everyone, as my hon. Friend has rightly said.

Mrs. Renée Short: I am sure the Minister understands that his policy is generally accepted. However, does he understand that the major obstacle preventing the policy from being implemented is the lack of resources for local authorities and voluntary organisations, which are expected to take over the responsibilities for patients who are removed from large mental institutions? If he understands that, will he ensure that resources are made available to those organisations and local authorities to start the process?

Mr. Hayhoe: I am grateful to the hon. Lady, who speaks with authority as the Chairman of the Social


Services Select Committee, for her broad endorsement of the policy. Having met representatives of the local authority associations and voluntary organisations that are principally concerned, I understand their desire to obtain more resources, especially bridging finance. These matters must be considered in the context of the overall constraints on public expenditure, which, in the Government's judgment, are absolutely essential.

Mr. Watts: Is my hon. Friend aware of the imaginative proposals put forward by East Berkshire health authority in conjunction with Berkshire county council for the development of community care for the mentally handicapped? Will he consider carefully the need for some bridging finance to facilitate that transfer?

Mr. Hayhoe: Regrettably, I have not the knowledge that my hon. Friend clearly has of those particular plans, but he will undoubtedly draw them more firmly to my attention in future.

Mr. Kennedy: What evidence and figures does the Minister have, regarding the welcome policy on community care, about mentally ill and mentally handicapped people being readmitted as a result of insufficient back-up services and support mechanisms in the community?

Mr. Hayhoe: I have no figures before me on that matter. I shall certainly write to the hon. Gentleman if those statistics are available.

Mr. Meacher: As there are 5 million carers in the community providing sustained care for elderly and disabled relatives, without whom the cost to the state of providing alternative institutional care would be enormous, why are carers uniquely denied any special support, such as a premium, under the Social Security Bill? How can the Government seriously claim to believe in community care when tens of thousands of severely disabled people will lose between £40 and £50 a week under the Bill, as a result of which they will be forced against their will from their homes into institutions, at a far higher cost to the state?

Mr. Hayhoe: The hon. Gentleman's comments are most revealing. He should believe in what most of us would regard as normal civilised behaviour, namely, being concerned about members of our own families who need care. Yet he believes that that responsibility should devolve to the state and that the state should have a primary responsibility in that area. The hon. Gentleman's view—it certainly is not mine—is of a great big nanny state.

Child Care Law Review

Mr. Michie: asked the Secretary of State for Social Services if, when the responses to the child care law review have been considered, a final report will be published; and if he will make a statement.

The Secretary of State for Social Services (Mr. Norman Fowler): The Government will be considering how best to take matters forward in the light of the responses to the report of the child care law review, and we will make our intentions known in due course.

Mr. Michie: In view of the consistent research findings that the provision of day care facilities for children reduces

the need for committal to local authority care also and in view of the high cost of state care for children, will the Secretary of State give an assurance that in the child care law review local authorities will have a statutory duty to provide adequate nursery places? At the same time, will he assure us that he will provide the financial wherewithal to carry out that statutory duty?

Mr. Fowler: The hon. Gentleman takes us further than the child care law review goes. So far, the response of officials to the report, which was published last October, has been favourable; but, having said that, I have the strongest sympathy with the point that the hon. Gentleman makes. Day care facilities of the kind that he sets out are an important contribution in this area.

Mr. Baldry: Having regard to recent cases and the report of the National Children's Home into children in danger, is it not vital to have full public confidence in the law in relation to every aspect of child care and dealing with children? Is there not a danger of this matter being tackled in a somewhat piecemeal fashion?

Mr. Fowler: There is a danger if this is dealt with in a piecemeal fashion, and that is one reason for the report. The Government accept the need for reform of the law. It should be dealt with as one, and I hope that we shall be able to put proposals to the House in the not too distant future that will enable that to be done.

Canterbury and Thanet (Blood Shortages)

Mr. Gale: asked the Secretary of State for Social Services how many operations were lost in the Canterbury and Thanet health authority area between 1 and 31 December 1985 as a result of the failure of the blood transfusion service to supply the Margate and Kent and Canterbury hospitals; why this failure to supply was allowed to occur; what steps will be taken to prevent a further seasonal blood shortage next Christmas; and if he will make a statement.

Mr. Hayhoe: Due to a seasonal shortage of blood donors, the Canterbury and Thanet district health authority postponed 18 non-emergency operations over the Christmas period. The blood transfusion service will continue to make special efforts to encourage donors to come forward over the Christmas and new year periods in future.

Mr. Gale: I am grateful to my right hon. Friend for his reply, although he does not give the figure that I requested. I trust that that will be forthcoming later. My understanding is that 50 elderly people had their operations postponed as a result of the failure of the transfusion service. Will my right hon. Friend give an undertaking that next Christmas, not only locally but nationally, there will be an advertising campaign to ensure that this kind of shortage, which is eminently predictable, does not occur again?

Mr. Hayhoe: The figure that my hon. Friend requested was given. Eighteen non-emergency operations were postponed over the Christmas period by that health authority, and there was sufficient blood for all emergencies that might have arisen. I understand that historically there has been some pulling back by donors during the Christmas season, perhaps for the understandable reason that they are involved in other matters. Special


appeal letters were issued, reminders were sent to regular donors, and there was special advertising. Those special attempts to get people to come forward and donate blood will continue in future.

Mr. Frank Cook: If, as the Minister says, the shortage of blood was seasonal, surely that was foreseeable. If so, why were operations scheduled when the blood for them could not be expected?

Mr. Hayhoe: The shortage was not of blood but of donors, and that shortage occurred only in this one region, which shows that the national blood transfusion service is a highly efficient and excellent organisation. I hope that the comments that have been made in the House this afternoon will in no way detract from the considerable public service that is provided by the transfusion service, nor from the public service of those who donate their blood. I hope that all hon. Members will encourage donors to come forward.

Private Residential Care (Elderly People)

Mrs. Clwyd: asked the Secretary of State for Social Services when he last visited a private residential care home for the elderly.

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Major): Such visits are made from time to time by Ministers. Most recently I visited such a home in Southampton on 15 January 1986.

Mrs. Clwyd: I am sure that the Minister will agree about not only the physical but the emotional needs of elderly patients. Therefore, what plans does he have to improve social work training for careers in those homes, given the present abysmal level, where less than 10 per cent. have any social training qualification at all?

Mr. Major: The hon. Lady makes an interesting and useful point. She will know that the registration of homes is the responsibility of social service departments. They must satisfy themselves about the level, adequacy and nature of staffing provided in those homes. They are fully aware of the hon. Lady's point.

Mrs. Currie: May I invite my hon. Friend to visit a private residential care establishment for the elderly in my constituency, where he will find that the standards are first-class? They could be copied throughout the rest of the country. Does he agree that, sooner or later, we will need some form of assessment system for people entering private residential care, to ensure that the large sums of public money being spent are being allocated appropriately?

Mr. Major: My hon. Friend has extended an enticing invitation, which I shall bear in mind. I entirely agree with her observation.

Mr. Meadowcroft: Is the Minister aware that the inflexible restrictions on supplementary benefit payments for residential care are causing great distress and tend to hit the nursing element of care? If the Social Security Commissioner upholds the decision of the local tribunal in Leicester of 3 December, which delared that the restrictions were unlawful, will the Minister undertake immediately to withdraw those restrictions?

Mr. Major: I cannot anticipate that result. We have considered the levels in the Ernst and Whinney report,

which we expect shortly. We are committed to a review of residential and nursing home limits within 12 months of their implementation. That is not far away now.

Mr. Meacher: Is the Minister aware that tens of thousands of elderly and disabled people risk acute anxiety as a result of the decision not to cover the rising costs of residential care due to inflation, as a result of which they run a real risk of eviction? Is he further aware that elderly and disabled people whose capital has been depleted below the supplementary benefit level since April last year still have no guarantee of security of tenure? Will he give an absolute and unquivocal guarantee that no elderly person will be evicted from residential care because of the DHSS's failure to cover the full cost of residential charges?

Mr. Major: Even under the Government of which the hon. General was a distinguished luminary, that happy circumstance did not not apply. Handicapped people and those who have been in homes for some time might be entitled to special hardship provision, for which my right hon. Frind the Secretary of State has discretion.

Mr. Meacher: That is not a guarantee.

Supplementary Benefit

Mr. Teddy Taylor: asked the Secretary of State for Social Services if he will make a statement on the operation of the new rules on supplementary benefit for persons living in bed and breakfast accommodation.

The Minister for Social Security (Mr. Tony Newton): We are reviewing supplementary benefit limits for all types of board and lodging allowances in the light of the Department's general monitoring of the arrangements since April 1985, information from local offices and representations from individuals and organisations affected. We shall also take account of the results of the management consultant's study that we have Commissioned on residential care and nursing homes when they are available. Our aim will be to reach conclusions in time for any changes that are shown to be needed to be made at the time of the general uprating in July.

Mr. Taylor: As bed and breakfast accommodation in Southend is about £7 a week above the amount allowed in the regulations, the result is a great deal of hardship. WiL my hon. Friend act on the representations made by Southend tenants and landlords, observing that it is quite ridiculous that Southend, a seaside town, should charge a rate £5 below that allowed in Peterborough?

Mr. Newton: We shall consider the representations that my hon. Friend made in correspondence with the Department with other representations in the context of the review.

Mr. Dubs: Is the Minister aware of the difficulties experienced by refugees and others seeking asylum in Britain? Will he take their needs and circumstances into account in the review?

Mr. Newton: We have had correspondence with the British Refugee Council. I assure the hon. Gentleman that during the review we shall take account of any problems that we are convinced must be tackled further.

Mr. Dickens: During the review, will my hon. Friend bear in mind that although many people would welcome


some form of adjustment, they do want him to lose sight of the fact that thousands of people are ripping off the taxpayer, and that that must be the central fact to be borne in mind?

Mr. Newton: We have been anxious throughout to strike a sensible balance between meeting real needs and preventing exploitation. That will remain our aim.

Mrs. Beckett: Does the Minister recognise that his hon. Friend the Member for Southend, East (Mr. Taylor) has admirably highlighted the fact that the limits are inadequate for those in bed and breakfast accommodation, just as they are inadequate for the elderly in residential and nursing homes, and especially for the physically and mentally handicapped? Does he also recognise that in saying that the limits will be reviewed in time for the July uprating he is saying that the review will take place after the date of the year's grace given to the physically and mentally handicapped, when their benefit can no longer remain at its original level? That is the time when people may have to move out of their homes. For the Minister to say that the uprating will be considered in July, when those people face the need for removal in April, cannot be right. Will he reconsider the timetable for the review?

Mr. Newton: The hon. Lady will recall that my hon. Friend the Member for Southend, East (Mr. Taylor) referred to the existence, under the new regulations that came into effect in November, of the capacity to deal with individual cases of hardship. Against the background of the July uprating, it is obviously sensible that we should seek to consider all the issues, together with general benefit levels, that will have to be set for that time.

Mr. Kirkwood: Will the Minister tell the House what guidance he has given to officials on the interpretation of the exceptional hardship exemption; and will he place a copy of that guidance document in the Library?

Mr. Newton: I shall consider the hon. Gentleman's request.

Hip Replacement Operations (Leicester)

Sir John Farr: asked the Secretary of State for Social Services what is the average waiting time for hip replacement operations at the Leicester city general hospital; and how this compares with the waiting time for such operations nationally.

The Parliamentary Under-Secretary of State for Social Services (Mr. Ray Whitney): Such local information is not routinely held by the Department. I understand that the typical waiting time for hip replacement operations at the Leicester city general hospital is currently 24 weeks. The corresponding figure for England in 1983, the latest year for which figures are available, is also 24 weeks.

Sir John Farr: I am grateful to my hon. Friend for that reply. However, will he redouble his efforts to improve that waiting time and to speed up the admission of patients, especially elderly people who so often need that type of operation? As there is much harassment and stress involved in waiting, will he do his utmost to shorten the waiting time even more?

Mr. Whitney: One of our objectives is to reduce the waiting time for hip replacement operations. That is one of the four priorities in the development of the acute sector services.
I understand that during the next three months the Leicester health authority is to appoint a resource manager. One of his principal functions will be to improve waiting times for hip operations.

Mr. Dobson: Does the Minister accept that he is totally misleading the House by quoting the figure of 24 weeks — [Interruption.] It is clear that members of the Government mislead the House practically every day—

Mr. Speaker: Order. That touches upon the honour of hon. Members. The hon. Gentleman must withdraw that remark.

Mr. Skinner: On a point of order—

Mr. Speaker: No.

Mr. Skinner: My hon. Friend has not been specific. That is not in "Erskine May." Do not withdraw.

Mr. Speaker: Will the hon. Gentleman please withdraw his allegation?

Mr. Dobson: If my remark was out of order, I withdraw it. Will the Minister confirm that 24 weeks is the median time? His written answers to my questions show that the mean average, which is what most people consider to be the average, is 35 weeks. Will he confirm that the figure is 35 weeks nationally and 35 weeks in Leicester?

Mr. Whitney: Through several written answers I sought to explain to the hon. Gentleman why the median time is used.

Mr. Skinner: Twister.

Mr. Whitney: It has been used as the routine method of giving the best indication of waiting time. That was the method used by the Labour Government and by this Government. Median time gives the clearest indication, free of the distortions that a few atypical incidents can create. Fifty per cent. of patients wait less than the median time.

Maternity Benefit

Mr. Nellist: asked the Secrertary of State for Social Services how many women he estimates will be affected annually by the changes in the payment of maternity benefit proposed in his White Paper.

Mr. Major: Provisional estimates are that an additional 5,000 to 10,000 women will qualify for maternity allowance for the first time. About 75,000 to 85,000 women will no longer qualify because they were not working when their pregnancies began. However, many of those women will be eligible for some sickness benefit as a result of their previous national insurance contributions. As to maternity grant, the abolition of the £25 lump sum will affect an estimated 750,000 women, but this will be replaced by a payment of about £75 to low income families.

Mr. Nellist: Given that the Tories are the party of family, why is it that The Times estimated last year that 500,000 women would lose entitlement to maternity grant, and that the new payment, which will go to 220,000


women, is about £62·88 less than they would have received had the Government increased the grant to the equivalent of its 1969 level? How much does the Minister estimate is the cost of essentials for a new baby? Does he agree with the estimate made by The Mirror last year that the cost is about £450, not the miserable £75 which the Government propose?

Mr. Major: I rarely agree with The MIrror. In this instance, to restore the maternity grant to the 1969 level —I am bound to say that it was not restored adequately by the Labour Government—would mean providing a grant of £125, at a cost of about £70 million to the Exchequer.

Mr. Favell: Far from the Tories not being the party of the family, would it not be far better, as the Minister for Health suggested earlier, for families to look after their own fathers and mothers, to look after their own children and to provide for their own maternity?

Mr. Major: My hon. Friend makes a valuable point. It might be worth drawing to the attention of the House the fact that our changes in maternity benefits have several important features that will benefit mothers. For the first time, pregnant widows will receive the statutory maternity allowance as well as the widow's allowance.

Ms. Richardson: Does the Minister realise from the figures that he read out that many women will lose altogether? Does he know that more than 1 million families live on or below the poverty line and that an increasing number of children are born into low-income families? With the changes that the Government propose in the Social Security Bill, more pregnant women will suffer stress and will have to go, with a begging bowl in their hands, to the social fund, but will get nothing. That, together with the cut in child benefit, will lead to a worsening of family support.

Mr. Major: I cannot agree with the hon. Lady. The reality is that most of the families of whom she speaks, and for whom she cares a great deal, will be entitled to the £75 maternity grant from the social fund, which is triple the sum presently paid.

Tobacco Products (Promotion)

Mr. Sims: asked the Secretary of State for Social Services what progress he has made in negotiations with the tobacco industry over a voluntary agreement on the advertising and promotion of tobacco products; and if he will make a statement.

Mr. Whitney: Discussions are continuing. My hon. Friend will, of course, understand that I cannot give details at present, but I shall inform the House of their outcome as soon as I can.

Mr. Sims: I appreciate my hon. Friend's position. In negotiating the agreement, will he take into account recent figures suggesting that, by the age of 16, nearly 40 per cent. of children smoke? Therefore, will he pay special attention to curbing the advertising and promotion of cigarettes that are likely to appeal to children?

Mr. Whitney: We are considering all aspects of the agreement during the current negotiations. As my hon. Friend rightly says, there is special concern about the incidence of smoking among young people, and that is a subject on which we shall concentrate.

Mr. Pavitt: Will the Minister examine the file which shows instances of the breaking of the voluntary agreement by tobacco companies during the past three years? Will he try to include sanctions in the agreement so that the Government can impose a penalty on those who break the voluntary agreement, instead of allowing them to get away scot-free as they do at present?

Mr. Whitney: I cannot discuss the details of the negotiations on the agreement, but I assure hon. Members that all aspects of the agreement are being considered.

Mental Health Act Commission

Mr. Proctor: asked the Secretary of State for Social Services when he next intends to meet the chairman of the Mental Health Act Commission.

Mr. Hayhoe: I have no present plans to meet the chairman.

Mr. Proctor: Is my right hon. Friend satisfied with the speed of the investigation of complaints which the commission decides to investigate? When my right hon. Friend next meets the chairman of the commission, will he consider with the chairman instituting a clear investigation into the complaints procedure?

Mr. Hayhoe: As I have said, I have no plans to meet the chairman, but if I do plan to meet him I shall certainly bear in mind what my hon. Friend said.

Ms. Harman: Will the Minister confirm to the House that he is aware of the tragic murder of Isabel Schwartz, a dedicated psychiatric social worker at Bexley hospital, who was murdered by a former client of hers, Sharon Campbell? Did the Minister know that Sharon Campbell was discharged against her wishes and did not get the appropriate treatment, care and support in the community that her desperate illness required? Will the Minister set up an inquiry into the events leading up to Isabel's murder? Will he recognise that there are a number, albeit a small number, of seriously mentally ill people who, if they are discharged under the community care policies and do not receive the support and treatment that their illness requires, will be a danger to themselves and to the community?

Mr. Hayhoe: That has nothing to do with whether I have plans to meet the chairman of the commission, but I certainly appreciate the seriousness and sincerity with which the hon. Lady has raised this matter, and I will give it careful consideration.

McColl Report

Mr. Flannery: asked the Secretary of State for Social Services why publication of the McColl report on services received by patients at artificial limb and appliance centres was delayed.

Mr. Newton: It became necessary for the Department and the working party to consider the implications of legal advice about the terms of the report. As a result of that, the working party consequently decided to make some amendments to its report, none of which, however, affected any point of substance or any of the report's conclusions or recommendations.

Mr. Flannery: I believe that the report came out yesterday and I have not yet had an opportunity to read it.


Can the Minister assure me that the points I have raised regularly with him about battery-powered wheelchairs are dealt with in the report? Many thousands of people, often elderly and chronically disabled, are not able to get out of their homes because they lack that facility. Can he assure me that a recommendation is contained in the report and that money will be forthcoming to buy battery-powered wheelchairs for the chronically disabled?

Mr. Newton: Because of the interest of the hon. Gentleman in this matter, I have already arranged for him to have a copy of the report. It contains recommendations about the provision of occupant-controlled outdoor wheelchairs. We shall certainly approach those recommendations in a positive spirit, though I must make it clear that the committee recognises the problem of resources, and, among other things, suggests that those resources should be found by curbing increases in the mobility allowance. I suspect that that is a proposition about which many Members, including myself, will have reservations.

Mr. Michael McNair-Wilson: Does my hon. Friend agree that Professor McColl's report underlines the inability of bureaucracy to meet people's needs efficiently and effectively? Could my hon. Friend expedite the recommendation for a new management board, and in particular could he see that it has a chairman with proper commercial experience?

Mr. Newton: I readily accept that the vigorous criticisms in the report demand an equally vigorous response from me and from the Department. I am confident there will be such a vigorous response.

Mr. Alfred Morris: The report is a profoundly important one for disabled people. One of its most crucial sentences is that action to put right the defects is already overdue. Since the cost of delay will be preventable pain and discomfort for amputees, how quickly will definitive action be taken? Will the NHS management board's findings be published, and if so, when can they be expected? What action will the Government take on what the report says about the late delivery of limbs to 53 per cent. of amputees, about seeing to it that surgeons who carry out amputations have experience of the problems, about excess profit-making and about ensuring that disabled people themselves are consulted at all stages?

Mr. Newton: We have already told the contractors that we shall wish to discuss future contracting arrangements in the light of the report. I have asked the NHS management board to report to me on management proposals and other matters by the middle of the year. Whether it would be appropriate to publish that advice, I shall wish to consider. The most important thing is to reach a stage of ministerial decision and necessary action, as I am sure the right hon. Gentleman would agree.

NHS (Management)

Mr. Galley: asked the Secretary of State for Social Services if he will make a statement on progress in the implementation of general management in the National Health Service; and if he will make a statement.

Mr. Fowler: Implementation is progressing well. All regional and district general managers have been appointed and about two-thirds of the unit general managers are now in post. Overall, these new posts reflect

a reasonable balance between those from within and outside the service and between disciplines within the service.

Mr. Galley: I am grateful to my right hon. Friend for that comprehensive reply. What measures of savings, service expansion and policy improvement will he be taking into account in assessing the success of general management? Will he also take into account the requirement that, whilst general management is applied firmly and flexibly, there needs to be adequate consultation with all Health Service professionals concerned?

Mr. Fowler: I endorse entirely what my hon. Friend said in the second part of his question. It is no part of the management process that it should in some way be stacked on the service without proper consultation. Savings have already been reported by health authorities. One region has made savings of £1·25 million a year from the restructuring.

Mrs. Dunwoody: Is the Minister aware that in many regions nursing teams and medical professionals are being replaced by the throw-outs from any industry that wants to get rid of its surplus executives at 50? Far from improving the management of the Health Service, the result is materially damaging the chances of good management for patients.

Mr. Fowler: I entirely reject what the hon. Lady has said. The Royal College of Nursing itself has accepted the principles of general management. It is right that it should have done so. We share its concern, however, that the principles should be implemented in a way that enhances patient care. To talk as the hon. Lady has done is nonsense.

Mr. Latham: Can my right hon. Friend confirm that there is no reason why nurses should not hold the post of district general manager?

Mr. Fowler: Absolutely, and the situation is that at the moment about 10 per cent. of unit general managers are nurses. I should like to see that percentage increased throughout the Health Service.

Northern Regional Health Authority

Mr. Clay: asked the Secretary of State for Social Services whether he is satisfied with the level and quality of National Health Service provision within the Northern regional health authority.

Mr. Hayhoe: Governments can never be entirely satisfied with the level and quality of health service provision. In common with the rest of the service, however, the Northern regional health authority is treating more patients than ever before and, backed up by real increases in resources, is making significant improvements in the range and quality of its services.

Mr. Clay: Given that since 1979, in that region, 18 hospitals have been closed, with the loss of 845 beds, and given, as the Minister must know, that the regional health authority estimates that next year the development of service provision will be less than 1 per cent., while at the same time the increase in workload will be over 2 per cent., how on earth can he make such a complacent and inaccurate reply to my question?

Mr. Hayhoe: For the simple reason that there have been very significant increases in activity levels in that region. Since 1979 the number of inpatient cases has grown by 15 per cent., day cases by 61 per cent., outpatient cases by 9 per cent., and accident and emergency cases by 3 per cent. That is a record of improvement based upon an increase in real resources in that area.

Social Workers (Training)

Mrs. Virginia Bottomley: asked the Secretary of State for Social Services if, in his consideration of the Central Council for Education and Training in Social Work training proposals, he will take into account the training proposals of the report of the inquiry in the death of Jasmine Beckford.

Mr. Whitney: We shall be taking into account the recommendations on social work training in the report on the death of Jasmine Beckford when considering, with the Central Council for Education and Training in Social Work and the other Government Departments and organisations affected, the proposals for qualifying training made by the council.

Mrs. Bottomley: Does my hon Friend agree that the House has shown little hesitation in increasing the responsibilities of social workers over the years, and that it is now important to move on the question of training, not only for the benefit of the profession, but for the confidence of the public?

Mr. Whitney: I certainly agree with my hon. Friend. As I said, the Department is in very important negotiations now with all concerned to improve the level of training of social workers.

NHS Expenditure

Mr. Chapman: asked the Secretary of State for Social Services what is the proportion of National Health Service total expenditure allocated to salaries and wages; and how this figure compares with six years before.

Mr. Hayhoe: In 1984–85, 60 per cent. of National Health Service expenditure was devoted to salaries and wages, compared with 63 per cent. in 1979–80. The proportion varies between services. For example, staff costs accounted for 74 per cent. of health authority revenue spending in 1984–85.

Mr. Chapman: Total expenditure on the Health Service has increased by more than 20 per cent. in real terms over that period. Do not my right hon. Friend's figures underline the fact that expenditure on medical equipment and services and new hospital building has risen at an even greater rate? Should he not spell out those facts to the public more clearly in the months ahead?

Mr. Hayhoe: There certainly are misunderstandings about the increase in real resources for the Health Service during the lifetime of this Government. I am grateful to my hon. Friend for giving me another opportunity to draw attention to the facts of this matter.

Oral Answers to Questions — PRIME MINISTER

Engagements

Ql. Mr. Freeman: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Freeman: As my right hon. Friend probably did not receive a copy of The Times this morning, like many other hon. Members, did she therefore have time to reflect that it must be in the public interest that our great national newspapers are produced as efficiently as possible? Does she agree that newspaper employers are right to use the Employment Act 1980 to the full to prevent industrial secondary action and picketing? Does she also agree that one person, the Leader of the Opposition, must be relieved at not getting his copy of The Times this morning, to save him from the embarrassment of the extremist activities of his friends?

The Prime Minister: I agree with my hon. Friend that Fleet street employers are fully entitled to use all the legal remedies available to them. Restrictive practices have dominated Fleet street for far too long and there has been far too great a resistance to technological change. When that happens, the change, when it does come, is much sharper than it would otherwise have been. I hope that the matter will soon be resolved and that we shall have The Times with our breakfast again.

Mr. Bidwell: May I draw the attention of the right hon. Lady to the brutal murder of Mr. Tarsem Singh Toor, the general secretary of the Southall Indian Workers Association, and the inevitable feeling that this was a political killing by an assassin? In view of the effect than it is having on my constituency, will the right hon. Lady assure the House that every possible step is being taken to bring the killers to justice?

The Prime Minister: I agree most earnestly with the hon. Gentleman. This was a brutal shooting and the Metropolitan police are taking urgent steps to investigate it. Action has also been taken by the police with regard to the security of Mr. Toor's relatives and others who may be at risk. Everything possible will be done to assist them and to track down the perpetrators of this brutal crime.

Mr. Teddy Taylor: In view of the fact, as indicated in Hansard yesterday, that the Government have decided to take the European Assembly to the European Court because of the illegal budget, but nevertheless to pay the money in the meantime, will my right hon. Friend take every possible step to make sure that the Commission will not spend the money that it may eventually have to pay back?

The Prime Minister: I take my hon. Friend's point It is quite true that the Council and we, this country, are taking the matter to court, but it is customary to offer to pay the full budget in the meantime. I share my hon. Friend's view, and I hope that the money will not be spent.

Mr. Livsey: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Livsey: In view of the furore over the leaking of a Government letter, does the Prime Minister not agree that now is the time to institute a Freedom of Information Act?

The Prime Minister: No.

Mr. Hirst: Is my right hon. Friend aware that the Howden group of Glasgow has recently announced a $50 million sale of wind turbine equipment, thus making this group the world leader in medium-sized wind turbine equipment? Is she further aware that the research and development and manufacturing of this order were carried out in the west of Scotland? Does not this welcome news contrast very sharply with the picture of industrial gloom that the Opposition seek to portray of Scotland?

The Prime Minister: Yes. I congratulate the Howden group of companies and all those who work for it on being so competitive as to get this excellent order, and I wish them well for the future.

Mr. James Lamond: When the Prime Minister received the report last week from her Cabinet Secretary about the leak, did the report refer to a difference of understanding among civil servants?

The Prime Minister: In my speech yesterday I set out the full circumstances — [Interruption.] — of the establishment and the outcome of the inquiry. Its accuracy was checked with all those concerned. I have given the right hon. Gentleman — [Interruption.] — reports, of course, are confidential.

Mr. Andrew Bowden: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Bowden: Is my right hon. Friend aware of the growing anger among parents at the refusal of the NUT to negotiate, and will she condemn the planned strikes, which can only do more damage to the education of the children of the country?

The Prime Minister: We deeply deplore the strikes. We are very glad that there is a prospect of an end to the damaging disruptions. I share my hon. Friend's view that it is deeply disturbing that the NUT was not part of those negotiations, but I hope that it will consider adopting the ACAS solution.

Mr. Alex Carlile: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer the hon. and learned Gentleman to the reply that I gave some moments ago.

Mr. Carlile: On 20 January this year, late in the evening, the Prime Minister, or someone acting on her behalf, telephoned Miss Colette Bowe while Miss Bowe was sitting in her London club. [Interruption.] There was also a call from the right hon. and learned Member for Richmond, Yorks, (Mr. Brittan). [Interruption.] Bearing in mind that the Prime Minister told us yesterday that she knew nothing about the right hon. and learned Member for Richmond, Yorks—[Interruption.]—having authorised the leak of the Solicitor-General's letter until 22 January, will she tell the House what was said—[Interruption.]—during those telephone conversations with Miss Bowe?

The Prime Minister: The hon. and learned Gentleman will be aware that my right hon. and learned Friend said yesterday that he could and did confirm that the statement I made was correct with regard to all the facts in his knowledge. I have nothing else to add.

Mr. Yeo: Does my right hon. Friend agree that the present time might be a favourable opportunity for Britain to join the exchange rate mechanism of the European monetary system, and does she further agree that if we were part of that mechanism real interest rates might not need to be at such a high level for the purpose of protecting the pound?

The Prime Minister: Not just now. Indeed, I think that had we joined a few months ago there might have been readjustments with regard to the deutschmark, so I do not think that now is the right time to join. It will, of course, continue to be considered. I understand that there may be a debate on this in the near future.

Mr. Kinnock: If a Department of State seeks agreement from the Prime Minister's Office and gets acceptance, is that not acceptance acquiescence? There really can be no misunderstanding about that.

The Prime Minister: I made a full statement yesterday, and I made a full one previously. I have nothing further to add.

Mr. Kinnock: If there is no dispute, if there is no disagreement, if there is no refusal and if there is no objection, is not the acceptance of a request for agreement acquiescence? Will the Prime Minister give a straightforward answer to a straightforward question? Is it acquiescence—yes or no?

The Prime Minister: I do not share the right hon. Gentleman's view of a straightforward question. My authority was neither sought nor obtained for the disclosure. I have nothing further to add.

Mr. Colvin: Does my right hon. Friend agree that her time would be better spent getting back to proper matters of state rather than listening to the waffle about Westland from the windbag opposite? Yesterday, she was found guilty of two things—tolerance and loyalty to officials and Cabinet colleagues. With faults like that, who needs qualities?

The Prime Minister: I assure my hon. Friend that my time is spent dealing with the great strategic matters and political issues of the time that must be solved.

Mr. Ron Davies: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Davies: In view of recent events, does the Prime Minister think that the best possible deployment of the new polygraph, the lie detector, would not be at GCHQ, Cheltenham, but at Downing street?

The Prime Minister: I have nothing to add to the reply that I have already given.

Mr. Michael Forsyth: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Forsyth: Is my right hon. Friend aware that a head teacher of a primary school in Edinburgh has seen fit to issue gloves to the teaching staff because he believes that they are at risk of contracting AIDS from the children in their care? Is that not a gross overreaction to the area's drug problem? In view of such ignorance, will my right hon. Friend ask the Health Education Council to mount a campaign to explain the causes of AIDS and to target those groups that are most at risk?

The Prime Minister: I agree with my hon. Friend that it is important to dispel ignorance about this disease. I understand that the Chief Medical Officer in Scotland is considering the matter urgently. I shall see that my hon. Friend's views are passed to the Health Education Council.

Mr. Dalyell: Referring to what my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) said, may I ask whether, in the Cabinet Secretary's report of the leak, there was or was not any reference to "differences of understanding" between civil servants? Does the Prime Minister understand that she has put distinguished civil servants in an invidious position? It is a matter of honour for all politicians, whether in office or not, to see that those civil servants are at least given justice.

The Prime Minister: As I said, one of the reasons for having an inquiry was to enable officials to put their view. I said in my speech yesterday that the accuracy of all the facts was checked with all those involved.

Mr. Wrigglesworth: As the Government have shown their willingness to intervene in the markets to keep down interest rates, and as the Exchequer has lost some £1·5 billion in revenue as a result of the fall in oil prices, will the Government now respond to calls by OPEC and other oil producers to discuss with them ways of managing the fall in oil prices in order to achieve more stability in the oil markets and thereby reduce the pressure on the pound and help other economies?

The Prime Minister: No, Sir, I do not think so. The United Kingdom maintains the freest oil province in the world. Subject only to technical limits, decisions on production levels are entirely in the hands of the producing companies. There has been no change in that policy.

Sir Fergus Montgomery: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Sir Fergus Montgomery: After the successful evacuation from Aden by the royal yacht Britannia and others, can my right hon. Friend give an assurance that the Government will do everything possible to protect the safety of British nationals in Uganda?

The Prime Minister: We stand ready to provide assistance for an evacuation of the foreign community in Uganda, should it be necessary. There appears to be no immediate need for such an evacuation. The high commissioner has reported that the British citizens in Kampala are safe, and that the airport is expected soon to be opened to normal traffic.

Mr. Ray Powell: asked the Prime Minister if she will list her official engagements for Tuesday 28 January.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Powell: Will the right hon. Lady give a truthful reply to my hon. Friend the Member for Oldham Central and Royton (Mr. Lamond)? Is she aware that the House will not allow this Westland affair to be swept under the carpet? A number of other questions need to be answered. Will she assure me that she came to the House yesterday and gave the truth, the whole truth and nothing but the truth?

The Prime Minister: As I said, the accuracy of what I said was fully checked with those concerned. I repeat that I have nothing further to add.

Mr. Dickens: On a point of order, Mr. Speaker. We know of your great traditions in trying to improve conduct and behaviour in this House during Question Time and during debates. Was it in order for the hon. Member for Bolsover (Mr. Skinner), to intervene twice from a sedentary position this afternoon? In the first instance he criticised your judgment in asking the hon. Member for Holborn and St. Pancras (Mr. Dobson) to withdraw. In the second instance he called the Parliamentary Under-Secretary of State for Health a twister. This is not the behaviour that we seek in this House. Would you please ask him to withdraw both remarks?

Mr. Speaker: I did not hear those remarks. If I were to ask the hon. Gentleman to withdraw everything that he says from a sedentary position, I would be on my feet for most of the day.

Mr. Campbell-Savours: My point of order is brief, Mr. Speaker. Over the next few weeks, and indeed months, there will be many of my hon. Friends who will wish to ask questions about the Westland affair. May I have an assurance that whenever Government Members intervene from a sedentary position to prevent my hon. Friends from asking questions, you will immediately intervene to protect them? Today during Question Time, and yesterday during the Leader of the Opposition's speech, and in the debate, whenever the Prime Minister was criticised, Conservative Members insisted on drowning out Labour Members. The House seeks your protection. May I have your assurance that you will give it?

Mr. Speaker: I thought that the debate yesterday, in the light of the very highly charged atmosphere, proceeded very well. I shall be, as I have always been, entirely evenhanded in my protection of both Back Benchers and Front-Bench spokesmen.

Mr. Winnick: On a point of order, arising out of questions, Mr. Speaker. There clearly remains a great deal of dissatisfaction about the Prime Minister's statement and her answers. Is there any way in which the civil servants at No. 10 and at the Department of Trade and Industry who were involved can be brought before the House so that we can try to find out precisely what happened with respect to the leakage of the letter from the Solicitor-General?

Mr. Speaker: The hon. Member knows the answer to that. He knows also that a Select Committee is dealing with that matter.

Mr. Ryman: On a point of order, Mr. Speaker. During Prime Minister's Question Time, when the hon. and learned Member for Montgomery (Mr. Carlile) asked a


number of searching questions about the leaking of the letter, there was a deliberate campaign by the Conservative party to drown his questions—so much so that he had to repeat them several times before he could be heard. Surely you can protect hon. Members who wish to ask relevant questions about the Prime Minister's conduct in this affair, so that hon. Members can put their questions sensibly, shortly and quietly.

Mr. Speaker: The hon. Member makes a valid point. He has been a Member for as long as I have, and he knows that frequently there is a good deal of background noise at Question Time and during debates. I wish that that were not so.

Mr. Sheerman: Further to that point of order, Mr. Speaker. Many Opposition Members believe that there is a new censorship and control of freedom of speech in the House. This is a serious situation. I have been a Member since 1979 and I am familiar with the normal level of hubbub in a normal debate, but there is a new conspiracy on the Government Benches to stop Labour Members from asking questions and receiving a fair hearing when Government Members do not want to hear the responses to the Westland issues and other questions.

Mr. Speaker: We have a heavy day in front of us. I cannot be a party to any conspiracies. I do not know whether there are any — I hope that there are none. I shall continue to do as I have always done to ensure a fair hearing for every hon. Member.

Mr. Alex Carlile: Further to the point of order, Mr. Speaker. I asked the Prime Minister questions about telephone calls to Miss Colette Bowe—[Interruption.]

Mr. Speaker: Order. I cannot hear the hon. and learned Member for Montgomery (Mr. Carlile)—[HON. MEMBERS: "The noise is coming from Conservative Members."] Order.

Mr. Carlile: I asked the right hon. Lady specific questions about telephone calls to Colette Bowe on the night of 20 January—

Mr. Speaker: Order. Is this a point of order for me? It sounds very much like a continuation of Question Time. I know that the hon. and learned Member will not do that. Will he put a point of order to me, please?

Mr. Carlile: I asked the Prime Minister a question through you, Mr. Speaker, on specific matters. I do not believe that the right hon. Lady could hear my questions relating to telephone calls to Miss Colette Bowe on 20 January—

Mr. Speaker: Order. I am afraid that this is a clear case of trying to get a second bite.

Mr. Skinner: On a point of order, Mr. Speaker. Earlier today during Question Time, on a genuine point of order —[HON. MEMBERS: "Oh."]— Oh, yes. At that time my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), the Opposition spokesman on health, referred to the Government misleading the House. He was subsequently pulled up by a Tory Member. You confirmed, Mr. Speaker, that my hon. Friend should withdraw any references to the Government misleading the House.
I have to remind you—[HON. MEMBERS: "Oh."]—Oh yes. Only a few days ago—it is recorded in Hansard—when one of my colleagues referred to the Government deliberately misleading the House, you asked him to withdraw the word deliberately. The rest was OK. We cannot make up the rules as we go along. The Tory Government do, but it would be better if you did not follow their example.

Mr. Speaker: Let me clear the matter for the whole House. Over the centuries we have proceeded in civilised debate and it has always been our practice and the rule of the Chair to rule out of order matters which touch upon the honour of any right hon. or hon. Gentleman on either side of the House. That is precisely what I did this afternoon.

Local Government (Financing)

The Secretary of State for the Environment (Mr. Kenneth Baker): With permission, I should like to make a statement. Together with my right hon. Friends the Secretaries of State for Wales and Scotland, I have today presented to Parliament a Green Paper entitled "Paying for Local Government". It makes major proposals for the future financing of local government in Great Britain.
The central theme is the need to bolster local democratic accountability. To do so, we need a way of paying for local government which narrows the gap which exists between those who use, those who vote for and those who pay for local government services.
The three fundamental weaknesses in our present arrangements are: the complex and uncertain effect of Government grants to local authorities; the way in which businesses can be heavily taxed to pay for excessive local spending; the unfair burden on householders of domestic rates.
May I deal with non-domestic rates? Business and commercial ratepayers foot 60 per cent. of the local tax bill but have no vote to influence local elections. For businesses, rates are uncontrollable overhead costs which can and do vary from year to year very significantly. Increased business rates lead to higher costs; to lower pay or job prospects; or to reduced investment. Those who are ultimately affected are quite unaware of how these extra burdens arise.
For all those reasons, non-domestic rates should not be a local tax. We propose therefore that a uniform non-domestic rate poundage should be set centrally. Businesses will be protected by indexing the poundages to inflation so that they can predict their liability with confidence. All of the yield of non-domestic rates would continue to support local government expenditure but it would be pooled and redistributed as an equal amount per adult in all authorities. Transitional arrangements would be required in each of the three countries to allow for an orderly move to the new system. We are setting in hand a revaluation of all non-domestic properties so that new rateable values will be available from April 1990.
I turn to the question of Government grants. The present grant arrangements are unstable and complex. They obscure the link between what people pay for local services and what they get for their money. But the clarity of that link is essential to local accountability.
We therefore propose a new two-part grant structure. First, a needs grant to compensate authorities for their different needs. Secondly, a standard grant—to reduce local tax bills by a standard amount per adult. Both grants would be fixed in cash, in advance, for the year in question. Local authorities would then know where they stood. We would remove the whole paraphernalia of schedules, tapers, multipliers and close ending.
Taken together with our proposals on the non-domestic rate, these grant arrangements would produce the clearest possible relationship between changes in spending and changes in tax bills. Every extra pound spent will be met in full by local domestic taxpayers. Every pound saved would benefit them in full. And that would be true in every authority in the country.
On the subject of domestic taxes, at present in England around 35 million adults are eligible to vote in local

elections. Only 18 million are directly liable as ratepayers. Of these, 3 million have their bill met in full by housing benefit. In many authorities well over 50 per cent. of the voters pay no local rates and therefore have little interest in restraining spending by the local authority; indeed, they have a clear interest that it should spend more.
Under the new social security proposals, every ratepayer will have to pay part of their rate bill. That still leaves 17 million adults with no liability to pay for the local services they use. It still means that the single pensioner or the single parent will face the same bill for local services as the house next door with four earners.
Rates are a tax on property. They are unpopular because the rates burden is carried on too few shoulders and needs to be spread more widely and fairly. There are broadly three alternatives—a sales tax, local income tax, or a flat-rate community charge. The Green Paper sets out the many difficulties we see both in sales tax and in local income tax, and the reasons why we prefer a community charge. It would be more closely linked to the use of local services and would give all adults a stake in local spending decisions. As with rates, there would have to be assistance for those on low incomes. Each local authority would set its own charge and there would have to be registers of all adults. The registers would be entirely separate from the electoral register.
This proposal would lead to the same local tax bill for the same standard of service in all areas. That would lead to significant changes in the distribution of local tax burdens between authorities. There would have to be transitional and safety net arrangements.
In England and Wales the community charge would start at a low level, with a corresponding cut in rates. The whole burden of any increased spending would fall on the community charge from the start, so that a clear link would exist between higher spending and higher community charges. In subsequent years there would be further transfers from rates to the community charge. In some areas rates would disappear within three years, and they would be eliminated in all areas within 10 years.
Under the proposals, some people would be paying local taxes who presently pay nothing. But those living on their own who presently pay more than their fair share, including many of the poorest households, would be better off.
The Green Paper illustrates the effects of the proposals, had they been in force in 1984–85. The illustrations show that the changes would be modest for most people, and that the shift to the new tax would be both gradual and manageable in terms of household incomes.
There are also proposals in the Green Paper to reform the capital control system on which I am inviting comments.
Those proposals amount to the most thorough reform of local government finance this century. It is right that there should be a substantial period of consultation. My right hon. Friend the Secretary of State for Wales and have asked for comments by 31 July. My right hon. Friend the Secretary of State for Scotland will make a statement tomorrow. The pace of further developments in England and Wales will depend on the outcome of the consultation process.
The message from our studies is clear; the way we now pay for local government undermines local accountability. That is no basis on which to run democratic local government. It has drawn central Government deeper into


conflict with local government. The alternatives are clear. We can continue down the present path—that is the road to closer central involvement in local affairs and increased central control—or we can face up to the weaknesses in our present arrangements and provide local government with a financial system to bolster local democracy. The Government prefer that course, and I commend it to the House.

Dr. John Cunningham: The Secretary of State has made a major statement on what is by any test a very important Green Paper. Will he accept that the Opposition are prepared to support any genuine attempt to increase local accountability and to return to local government the freedoms and local democratic control that have been consistently eroded during the seven years of the Prime Minister's Administration?
Is the right hon. Gentleman aware that the Opposition welcome the Government's recognition that after seven years of Conservative Government local authority finance is in a bigger mess than ever before? Does he realise that we agree with his message last week in a letter to Tory councillors nationwide that the system that his Government have created is unfair and stifles local accountability?
Does the Secretary of State recognise that, after seven years of successive failure in local government finance, the Green Paper announces yet again the abandonment of the Prime Minister's oft-repeated promise to abolish domestic rates altogether in this Parliament? Is it not clear that the Prime Minister has comprehensively ratted on that promise to the ratepayers? Is not the general proposition at the heart of the Green Paper a proposal to introduce a poll tax to be imposed on every adult regardless of income or ability to pay? Will that not also be a tax on the right to vote, as the Green Paper makes abundantly clear? Is the right hon. Gentleman aware that no other Western industrial democracy employs such a grotesquely unfair system as the basis of the major source of local government income?
What has changed since the Government rejected these very proposals in their 1983 White Paper on rate reform? The Government rejected the proposals then on the basis that they were expensive and bureaucratic to administer, bearing harshly on low-income families and a tax on the right to vote. That was revealed in the Government's White Paper two years ago.
Is it not the case that every ratepayer, regardless of means, will have to pay a minimum flat-rate charge under the Government's proposals? Why has the Secretary of State, in his statement and in the Green Paper, been so obscure about the proposals to help low-income families get over the major impact of the new impositions?
Will the Secretary of State confirm that his proposals for a uniform business rate are a further huge centralisation of power which will undermine local democracy and accountability and not enhance it? It will leave in the hands of Ministers massive additional controls over local authorities regardless of their political persuasion. Will not this mean higher business rates in many Tory local authority areas? I ask Conservative Members to study the proposals carefully, because that is the implication. That is what is at stake, especially if the yield is to remain the same as at present.
Why do not the right hon. Gentleman and his right hon. Friends address themselves to the far higher costs to industry and commerce of interest rate charges which result from the Government's policies? What are the distributional effects of changes on people in different circumstances in different local authority areas? The figures that he has given relate to regions and national situations, not to specific local authority areas. In that sense, the figures quoted are nothing short of misleading.
Is not the right hon. Gentleman asking his right hon. and hon. Friends to accept a time bomb ticking away under them in their constituencies and local authorities? These proposals will bring shock waves of horror to many Conservative Members who believe in some craven way that they and their constituents will benefit from them. Will the right hon. Gentleman publish the data and studies that he and his right hon. Friends have used and made to give the examples in the Green Paper?
Is not this exercise a vain attempt to redeem the pledges of the Prime Minister and to cast a cloak of obscurity over the failure of the Prime Minister in seven years in government to deliver that simple, if not cynical, promise to abolish domestic rates? Is not the reality right through the Green Paper simply that rates will be here long after the Government have gone?

Mr. Baker: The hon. Gentleman asks my hon. Friends to study the Green Paper carefully. I hope that he takes such advice himself, because rarely has the House heard such a thin and empty comment. I have tried in the Green Paper to set forward the central issue of what I hope will be a great debate upon the future of local accountability in local government. During the course of that great debate the Labour party will have to say what system of local government finance it will support. From the hon. Gentleman's concluding comments, and from those of his hon. Friend the Member for Blackburn (Mr. Straw) recently, I assume that he will favour the retention of the rating system.

Dr. Cunningham: Answer my questions.

Mr. Baker: I shall answer the hon. Gentleman's questions. The hon. Gentleman argued that the community charge is unfair and regressive and will hit the poor, but I remind him that rates are also regressive and unfair and bear little relationship either to ability to pay or to the use of local government services. If rates are to be kept, there will have to be a major revaluation and that will create a turbulance in family incomes much greater than what I am proposing to the House.
The hon. Gentleman asked me about those who will benefit. Let me consider those who will face lower bills under my proposals. Eighty-six per cent. of all single pensioners will receive lower bills. Eighty per cent. of single adult householders will face lower bills. Businesses in the north, the midlands and the north-west will face lower bills. Areas of high unemployment will face lower bills.
The hon. Gentleman asked me whether the proposal was a tax on the right to vote. It most certainly is not. The registers will be separate. There will be people on the community charge register who will be liable to the community charge who do not have the right to vote—for example, foreigners resident in our country. What I


have made clear and what I do not disguise is that we are widening the tax base. We are spreading the burden more widely and more fairly to increase local accountability.
Most of us here subscribe to the notion of no taxation without representation. The hon. Gentleman believes in representation with no liability to taxation. He wants a right for those who contribute nothing to impose the full cost of their demands on those who contribute everything. I should be careful about going out to dinner a la carte with the hon. Gentleman because, under his system, I would be left with the bill.

Sir Hugh Rossi: Does my right hon. Friend accept that the return, after many decades and not just the last seven years, of the nexus between taxation and representation will be widely accepted and welcomed in the country both by those who have to pay and those who are conscious of their democratic rights? A far greater control over local authority spending will be achieved by the payer through the ballot box if taxation and representation are equated than by a cumbersome central Government apparatus.

Mr. Baker: I endorse what my hon. Friend has said; it goes to the nub of the question. The choice before the country in financing local government is whether one depends upon the constraints operated through the ballot box with a wider base of taxpayers or whether one goes for more central control. I reject the move towards more central control.

Mr. Barry Jones: Why are there no plans for the Secretary of State for Wales to make a statement on a matter of great importance for the Principality? Why is the Secretary of State for Wales hiding behind the Secretary of State for the Environment? I happen to know that the Secretary of State for Wales is at least part author of this iniquitous proposal of a poll tax.

Mr. Baker: There are important differences between the proposals as regards England and Wales and those for Scotland. However, the proposals for England and Wales are substantially the same and we thought it appropriate for one statement to be made. The hon. Gentleman's comments have been noted, and he may wish to pursue the matter through the usual channels.

Mr. John Heddle: My right hon. Friend's announcement of the introduction of a national business tax will be welcomed widely by industry and commerce which has no voice, no sanction, no vote and no say in the way that profligate councils spend their money. Will my right hon. Friend accept that the introduction of a community charge may create some losers as well as some winners? To avoid any possibility of retrogression, will he extend the consultation period beyond 31 July so that the consultation may be as wide as possible?

Mr. Baker: I entirely agree that the proposal for a national business tax will be widely welcomed. The proposals are well founded.
As regards the consultation period, the local authority associations have already represented to me their wish for a longer time than 31 July. I am prepared to consider the matter, but I would not want to extend the period beyond October.

Mr. Eric S. Heffer: If the right hon. Gentleman is serious in what he said about no

taxation without representation, why have the Government not brought in a concept of local income tax? This has been argued for a long time and is extremely successful in Sweden. Is it not clear that the right hon. Gentleman and the Government are proposing to put further burdens on the shoulders of ordinary working people and not on those who can afford to pay? Is it not clear that the Government's proposals for registration are leading to a situation where criminal sanctions — I should like to know what the criminal sanctions are—will be against people who, for various reasons, may decide not to register.

Mr. Baker: We have looked at the various proposals for a local income tax. There are several variations and varieties, but all are administratively complex and would require a register, as the local community charge requires a register. If one moved to a form of local income tax, it would on average put an extra 4½p on the basic rate. The rate depends on the spending of various authorities and would range from an extra 2p to an extra 11 p on the standard rate. I do not believe that many people would welcome the prospect of an uncontrolled capacity to raise local income tax which would he left in the hands of Mr. Bernie Grant or Mr. Hatton. In their hands it would be confiscatory.

Mr. Charles Morrison: Is my right hon. Friend prepared to say whether there are any interim, short-term proposals in the Green Paper which will help to ensure that shire counties are not faced with the same difficulties next year and ensuing years as they face this year? May we assume that the business tax will ensure that there are virtually no businesses which will be worse off under that tax than they are at present?

Mr. Baker: I announced today that there would be a revaluation of business properties starting at once and coming into effect in April 1990. That will lead to an adjustment between the older properties, probably in the north, and the newer properties, probably in the south. That will have to be phased in over five years.
As for striking the average at national poundage, we put forward the idea in the Green Paper that, taking the mathematical average, the poundage could be reduced by 5 per cent. or indeed by a lower figure. The discretionary 5 per cent. will be left to the local authorities if they wish to charge it.
My hon. Friend asked whether there would be any special transitional arrangements, for the three years from 1987 to 1990 before the new operation comes in. Clearly there will have to be transitional arrangements even before this operation starts to avoid the type of debate that we had last week which I do not want to have again.

Mr. John Cartwright: The great debate is not starting today—it began in 1974 with the setting up of the Layfield committee, whose recommendations were rather better based than those before the House today. Does the Secretary of State recall his own Government's White Paper of August 1983 which, after extensive consultation, totally rejected the idea of a flat rate community charge because it would be unfair, complicated and expensive to administer? Why is the right hon. Gentleman now recommending something which his Government rubbished two and a half years ago?

Mr. Baker: The reasons set out in the 1983 White Paper for rejecting a community charge were largely


operational. The hon. Gentleman will see that if he studies the White Paper. The new grant system introduced in 1981 did not check the high spenders because there was insufficient local accountability under the rating system. That led to the introduction of rate capping and greater central control. A path has to be chosen by all parties in the country: do they want further central control, more control from Whitehall, or do they want to increase local accountability for the domestic taxpayer? That is the central issue.

Mr. Ian Gow: Is my right hon. Friend aware that few, if any, local authorities which are profligate in the use of taxpayers' money would have been elected, let alone re-elected, if there had been a closer relationship between those who vote and those who pay? The broadening of the tax base will be widely welcomed not only by Conservative Members but in the country as a whole. My right hon. Friend's proposals constitute a great advance in equity of taxation.

Mr. Baker: I thank my hon. Friend, and agree with him. When the local elector goes to the ballot box and tries to make up his mind whether he should support the council, it is very difficult for him to determine whether the rates have gone up as a result of the high spending of the local authority or as a result of what has happened to the grant. There is no clear link. The new grant system which I have announced today will allow that link to be established. The local elector will be able to make his own judgment. In future, as a result of the new grant system and the standard national business rate, all the spending decisions will depend upon the council and upon it saying to its electorate, "This is what you want, so vote for us".

Mr. Frank Field: As a sizeable number of poor people will be made worse off under these proposals, what measures does the Secretary of State propose to introduce to compensate them?

Mr. Baker: The Green Paper says that there will have to be a system of support for people on low incomes. One of the features of a community charge is that it will reduce average bills for the lowest income households with net incomes below £75 a week. There will be a rebate system that applies to the community charge as it applies to rates. For people on the lowest incomes, the community charge would be 2·4 per cent. of net income whereas rates would be 3 per cent. of net income.

Mr. David Howell: Does my right hon. Friend agree that our objective is genuine independence and genuine accountability in local government? Does he agree that his plans take considerable strides in that direction? Will he reassure us that his plans for new grants and for the community charge, which I warmly welcome, will not be put at risk or overthrown by short-sighted Treasury intervention in the name of vague and hazy macroeconomic goals?

Mr. Baker: I think so. I welcome my right hon. Friend's support for increasing local accountability. I hope that the system will produce the checks and balances which I believe are necessary. We say that some form of selective rate capping may be needed for the transitional period, but I hope that it will be possible to phase that out.

Mr. Terry Davis: How will the cost of preparing a community charge register and collecting this new tax compare with the present system?

Mr. Baker: We estimate that it will cost about £30 million a year to prepare the register. The cost to the valuation office of domestic properties alone is about £30 million a year. If we were to keep the rating system and have a domestic revaluation, it would cost about £65 million.

Mr. Robert Rhodes James: Is my right hon. Friend aware that the proposal to include higher education students in the new community charge would be acceptable if it were not for the fact that they are already suffering from loss of grant and benefits, as proposed by the Secretaries of State for Education and Science and for Social Services? Are they covered by the low-income provisions?
Has my right hon. Friend discussed this with my right hon. Friend the Secretary of State for Education and Science?

Mr. Baker: The answer to my hon. Friend's latter question is yes, of course.
It is proposed in the Green Paper that students should also be liable to the community charge. I should like to say something about this as the circumstances regarding students and rates are complicated. There is an allowance in students' grants for housing costs. In addition, universities pay local authorities something for rates for students who live in halls of residence. In addition, students in digs who pay rent contribute towards the rates in their rent. Students who live at home may or may not pay their parents. We shall have to explore such factors much more fully during the consultation period.

Mr. Allen McKay: Is the right hon. Gentleman saying that registration will be done on the basis of the electoral register? If so, how will he calculate for people who do not register? His answers have implied that industry will be better off, that pensioners will be better off and that the poor will be better off. In areas such as mine, where there is 20 per cent. unemployment, who will pay?

Mr. Baker: I have made it clear that we are broadening the tax base and that more people are to be brought into tax. The Green Paper sets that out fully. There will be a separate community charge register, which will not be the same as the electoral register.

Mr. James Couchman: Is my right hon. Friend aware that there are many small business men, including me, who will be profoundly grateful for his announcement about the business rates? That is especially true for those of us who were forced to stop trading in areas where rates had risen so much as to make our businesses unviable. What are the implications for the precepting authorities such as the Inner London education authority and the police?

Mr. Baker: The arrangements for precepting will remain the same. District councils will levy and collect the community charge. I strongly agree with what my hon. Friend said about the national business rate. Businesses pay £1·50 for every £1 paid by domestic ratepayers. In some areas, local authorities have milked businesses. For example, in Camden businesses pay £4 for every £1 paid


by domestic ratepayers. Moreover, we shall link any increases in the national business rate to the rate of inflation.

Mr. Simon Hughes: Is the Secretary of State aware that the alliance parties accept his two premises — that the rating system and rate support grant system are indefensible, and that there must be more accountability? Is he further aware that the policy conclusions that he reaches show that the Government are unsound in policy, just as yesterday's announcements showed that they are unsound in their practices, as the poll tax is the most reactionary proposal since 1601?
Does the right hon. Gentleman agree that the majority of ratepayers will be worse off? Does he agree that Government control will be increased? Will he confirm that local income tax would provide better accountability, reduce local government's dependence on the Government, and reduce Government-imposed income tax?

Mr. Baker: I do not know which brand of local income tax the Liberal party will eventually settle on, but it does little for extra accountability. Before the hon. Gentleman gets too enmeshed in supporting local income tax, perhaps I might tell him what it would do to tax rates in his constituency. I have taken the rate for Southwark and calculated what it would represent in extra income tax. The standard rate for taxpayers in Southwark would increase from 30p to 41p.

Sir David Price: Is my right hon. Friend aware that, for those of us who have called for rate reform for at least 20 years, my right hon. Friend's statement is most welcome? In view of the long history of Green Papers and the failure of Lord Wilson, when Prime Minister, to allow the Redcliffe-Maud commission even to consider local finance or local taxation, why do we have to waste a year on a Green Paper rather than proceed immediately to a White Paper and to a Bill?

Mr. Baker: I entirely appreciate my hon. Friend's impatience, and I thank him for what he has said about the proposals. This is the most fundamental change in local government finance this century. It changes the grant system, the business rates system and—

Dr. Cunningham: Has the right hon. Gentleman already decided, then?

Mr. Baker: No. These are the proposals which the Government are putting before the country. All interests should have adequate time to comment on our proposals.

Mr. Hugh Brown: Many of us are aware that the financing of local government is too complex and far from perfect, but does the right hon. Gentleman agree that if some people, groups, or categories pay less, others will have to pay more? Why is it right for the 3 million poorest families in the country to pay more?

Mr. Baker: I made it clear that there will be assistance for those on low incomes. There is a high level of poverty in single-person households and those people will benefit from a community charge. For those on low incomes the community charge is less regressive.

Mr. Gwilym Jones: I join the welcome for my right hon. Friend's statement, as I welcome any movement towards the abolition of that dreadful anachronism, rates, especially with the excessive

increase of 25 per cent. that is facing my constituency. Does my right hon. Friend accept that we in Wales view with concern the suggestions in the press that the Principality is to be used as a proving ground for rate reform? Does he accept that we would need to scrutinise closely any such idea?

Mr. Baker: I assure my hon. Friend that, from the point of view of timing, the changes in England and Wales will run in harmony. There is no proposal in the Green Paper that changes should be made in Wales prior to being made in England. My right hon. and learned Friend the Secretary of State for Scotland will be making a statement tomorrow about rates in Scotland.

Mr. Chris Smith: Is it not the central philosophy of the Green Paper that only the votes of those who pay will have any real validity? Is that not an outdated concept? Is it not better to embrace the concept of one-person, one-vote, which is a much more democratic principle?

Mr. Baker: One reason for the breakdown between voting and paying for local services is evident in the borough of Islington. In that borough, as a result of excessive spending, the average rate bill is now almost £700. I do not believe that it would have reached that figure if more people—

Mr. Heffer: Is that all?

Mr. Baker: I am sure that the hon. Member for Liverpool, Walton (Mr. Heffer) has even higher ambitions to increase the rate bills in Liverpool.
I do not believe that that high figure would have been reached if there had been a better connection between those who vote and those who pay for local services.

Mr. Patrick McNair-Wilson: Is my right hon. Friend aware that his proposal to spread the cost of local government services more widely will be welcomed by the hard-pressed ratepayers in my constituency and more widely still? However, as the teachers' dispute has shown that local authorities alone cannot pay for the cost of teachers' salaries, has he given any consideration to taking that biggest single item of expenditure out of local finance and putting the responsibility on the central Exchequer?

Mr. Baker: We have considered that possibility, as have previous Governments. It would appear to be a simple and seductive answer to take a large part of expenditure off local government rates and meet it through the central Exchequer, which would involve higher income tax or higher VAT. However, there is a great disadvantage. If the annual financing of education is removed from the local authorities, ultimately the power will end up with a central education service. I know that some hon. Members have favoured that solution, but if the financing of education is moved to the Department of Education and Science or to a central agency, it is taken away from local government. It is not only a matter of allocating money. A central agency would have to decide how many teachers there should be in a primary or secondary school and it would have to decide on all sorts of expenditure. I ask my hon. Friend and those who feel that that is an easy answer, to consider and reflect what that would mean to local government. The powers and responsibilities of local government would be considerably diminished.

Mr. John Evans: Does the Secretary of State expect that the standard business rate will lead to the introduction of rate equalisation under which money would be transferred from the prosperous local authorities in the south of England which have much industry to those local authorities in the north, which have lost most of their industry?

Mr. Baker: Two matters will affect the distribution of the business rate. The first is the revaluation of industrial property. Much property in the midlands, Manchester and the north of England was valued in 1973, when those areas were relatively more prosperous. For that reason, adjustments must be made. They will run alongside the second factor, which is the movement towards a national business rate, to be phased in over five years.

Sir William Clark: Rate reform will be widely welcomed in the country and I urge my right hon. Friend to reject the party political points made by the Opposition. Does he agree that the present rating system is a poll tax in that a single occupant of premises pays a similar amount in rates as the person next door in similar accommodation, who shares with four of five adults? Does he agree that it is essential to have a different register from the electoral roll? Many foreigners should be paying rates but they are not on the electoral roll. It is essential that we do not use only the electoral roll.

Mr. Baker: I agree completely with my hon. Friend's point about the position of foreigners. There is also a proposal in the Green Paper for a collective community charge, for example, for boarding houses, which have a rapid turnover of occupation. The landlord or the owner would be responsible for registering the occupants. That is an important point.
On the matter of basic unfairness, I agree entirely with my hon. Friend. In two houses, side by side, one occupant could be paying the full rates while four are paying them in the next house. They are all using local government services, but the four occupants, who could be earners, are getting an excessively good deal compared with a single person living alone.

Mr. James Lamond: If the Secretary of State believes that rates are a harsh tax on the one-parent family and old-age pensioners, why have the Government spent their last seven years transferring as much of the burden as possible from central Government to local government, thus worsening the position? If the Secretary of State believes that those who vote at local government elections consist of a mixture of those who have no need to pay rates, but expect to get a bonanza from the local council, and those who are worried because the rates are so excessive that they cannot pay them, why is the turnout only 35 per cent. to 40 per cent.?

Mr. Baker: We have tried to improve local accountability by reducing the support that flows from central Government. The system can only operate with an effective, wider tax base, which is what we are proposing.

Mr. Nicholas Winterton: Does my right hon. Friend accept that, while all of us will study carefully the radical proposals, the likely result of his announcement is that rural counties, such as Cheshire, will suffer from the standard business rate levy? The majority of middle-income earners in the rural county of Cheshire will pay considerably more. Is that a correct assessment?

Mr. Baker: I urge hon. Members to reflect upon the consequences of the proposals on the business rate and the figure at which the national average is struck. On that depends whether there will be more gainers or losers in the business world. The Green Paper proposes to strike the rate at the national average — 180p, in 1984–85. It further proposes that that should be reduced by 5 per cent. which would bring in many of those who are close to the national average who would have to pay more if it were struck at a higher level—[HON. MEMBERS: "Answer.] The answer depends upon the level at which the national average business rate is set. That is a matter upon which we shall take advice and consult.
Regarding the incidence of the tax burden upon people in different areas, the broad result of the proposals will be a transfer of the tax burden from householders to non-householders.
On the question of resource equalisation, the answer to my hon. Friend's question lies in chapter 4 and annex J.

Several Hon. Members: rose—

Mr. Speaker: Order. I have to protect the business for today, because there is the introduction of Members, a Ten-minute Bill and an important debate. I shall allow questions to continue for a further 10 minutes, but then we shall have to move on.

Mr. William O'Brien: Is the Secretary of State aware that the Government's proposals mean that people who are now granted concessions because of their low incomes will have to pay rates in the future? Will that not be seen by the elderly, especially elderly widows, as a further tax upon their incomes, and almost as a standing charge? Would not the aged and widows be better served by allowing them the existing concession of complete or partial rate rebates according to their incomes?

Mr. Baker: The hon. Gentleman's comment is more appropriate to the Social Security Bill, which we shall discuss later today, since that proposal is enshrined in the Bill.

Mr. Fred Silvester: Does my right hon. Friend realise that many of us share his objective of reducing the conflict between central Government and local government? Two areas of chief conflict have been the Government's desire to control aggregate local authority expenditure and the method of distribution of the rate support grant. Does the Green Paper mean that the Government have abandoned their objective of controlling the aggregate of local government expenditure? How will the needs element be distributed?

Mr. Baker: The answer to my hon. Friend's penultimate question is: not entirely. The distribution of grant will be much simpler and clearer under the new system. It will consist of two elements: a standard grant which all authorities will receive on a per capita basis as of right, and a needs grant. The present grant amounts to about £8 billion. About £4 billion will be available for the standard grant, and about £4 billion will be available for the needs grant. On the needs grant, we shall have to devise a system that is simpler and clearer than the present GREAs.

Ms. Clare Short: Will the Secretary of State answer the important question asked by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith)? When the right hon. Gentleman


talked about no taxation without representation, he meant no representation without taxation. That principle goes to the heart of democracy. The logic of the right hon. Gentleman's position is that the unemployed and non-taxpayers will have removed from them the right to vote in elections.

Mr. Baker: No right to vote will be removed, but it cannot be right that, in some authorities, 50 or 60 per cent. of those who vote make no contribution to the payment for local services.

Mr. Richard Holt: Does my right hon. Friend accept that throughout Langbaurgh, Middlesbrough and the whole of Cleveland and the north of England his proposals will be welcomed, especially if they mean the elimination of the current practice in Cleveland of appointing political assistants to the leader and other members of the council?

Mr. Baker: Such incidents happen because there is no effective ballot box control on excessive expenditure. We must move to a better system. I thank my hon. Friend for his support.

Mr. Dave Nellist: How will those who are involved in properties or land that is currently derated be affected by the proposals? Will the proposal for a local income tax be extended to those who currently pay no rates? Does the Secretary of State accept that the echo that he senses among many working people for reform of rates is not caused by the present method of paying rates but by the fact that, in seven years, the Government have taken £10,000 million from local councils and could halve all rates if they returned grant to the 1979 level?

Mr. Baker: The hon. Gentleman accused me of introducing a local income tax—

Mr. Nellist: A community fine, then.

Mr. Baker: No, it is a community charge, and it is not based upon the ownership and possession of property. It is based upon a people's tax.

Mr. Michael Cockeram: Does my right hon. Friend realise that he has opened a Pandora's box that will affect every household in the land and that we are now
launched upon a long-running period of protest beside which the Westland affair will be but a brief interlude?

Mr. Baker: I simply do not believe that the present system of local government finance can continue. That is why we introduced the proposals. The present system contains basic unfairnesses and inequalities. I have published a Green Paper because I want the proposals to be examined and debated throughout the country so that each party can put forward its proposals and be able to justify them.

Mr. Nicholas Brown: Why is the Secretary of State inviting us to discuss the matters in the Green Paper after the passage of the Rates Act 1985 and the abolition of the metropolitan authorities rather than before then?

Mr. Baker: As I said in reply to an earlier question, in 1981 we introduced a system which we hoped would act as a brake upon excessive local spending. That did not work, so the further controls were introduced. I have said clearly that that should not be the path forward for local

government and that there must be a more equitable base for true local accountability. I favour local accountability, because local democracy will not survive without it. When I am asked about gainers and losers, I always reply that the biggest gainer will be local democracy.

Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that to many of us it is pleasing that a promise made many years ago by a former Secretary of State for Education and Science, who has now become Prime Minister, that we should consider what changes are to be made has been fulfilled? But does he agree that, as there is no such thing as a free dinner, there is no such thing as a free rating system? Will we have a system whereby the Government not only decide what is spent but are willing to pay for what they impose on local authorities? If not, does he agree that, whatever system we devise, local ratepayers or taxpayers will be unable to afford it?

Mr. Baker: My hon. Friend is right to mention that important point in local government, which is always complaining that central Government impose duties upon it and do not provide it with the cash to carry out those duties. The proposals for standard grant recognise that some national services are required. That should meet my hon. Friend's point. As he comes from the west midlands, I should say that the area does badly under the present system, because its average incomes are about 5 per cent. below the national average, but its average rateable values are about 5 per cent. above the national average.

Ms. Harriet Harman: Does the Minister realise that the thrust of his arguments will be deeply offensive to hundreds of thousands of people, many living in Conservative-controlled areas, who cannot pay their full rates? Is he not betraying an insidious attitude to democracy and individual rights when he relates the democratic right to vote to the ability to pay?

Mr. Baker: I have answered those points several times. The hon. Lady, who represents a constituency in a high-spending inner-city authority, should be fully aware of the inequity of the present rating system and what it means to many of her constituents.

Mrs. Edwina Currie: Is my right hon. Friend aware that, in April, the Comptroller and Auditor-General commented that the existing RSG system failed to prevent overspending, failed to protect the priorities of local government spending, and showed a poor distribution of the financial burden among ratepayers in different areas. Does he agree that the system that he is now proposing is clear, will work and is comprehensive? It will be extremely welcome in local authorities and should be introduced as soon as possible.

Mr. Baker: I could not have said it better myself.

Mr. David Winnick: Is it not true that the proposed poll tax — there is no need for fancy names, because that is what it is—is the most regressive system of revenue-raising that the Minister could have found? Did not all his predecessors as Secretary of State in the Conservative Government reject the proposal for the obvious reason that it is unfair, unjust and will especially penalise those on low incomes?

Mr. Baker: The basic fairness of what I am suggesting is that those who benefit from local government services should be involved in paying for them. The country will not perceive that as an unfair principle.

Mr. Roger Gale: My right hon. Friend will understand that the many elderly, single, owner-occupiers in my constituency will welcome what they regard as the death knell of an unfair rating system. They will also appreciate the re-establishment of the link between taxation and representation. Will my right hon. Friend assure the House that this will not mean that those who are taxed without representation—small businesses in the south east—will ever again be asked to subsidise profligate inner city councils?

Mr. Baker: My hon. Friend touches upon the national business rate. There will be consultations about that with the representatives of local government. The CBI conference voted against the national business rate. Since then, the CBI tax committee has come out in favour of it, and I believe that the chambers of commerce are on record as favouring a national business rate.

Mr. Frank Dobson: The Secretary of State talked about winners and losers. Can he confirm that one of the winners under this proposition will be the occupants of the Thatcher retirement home in Dulwich?

Mr. Baker: In widening the tax base, which should be widened in this way, one has to ask whether the local government system should be financially redistributive. More than half of local government money comes from the national taxpayer. That is, of course, principally a redistributive source.

Mr. John Powley: While welcoming the Secretary of State's proposals, may I draw his attention to the tremendous number of abortive man hours, particularly in local government, that were expended on discussion of previous White Papers and Green Papers and the Layfield report? Will he give an assurance that the Government will have the determination to implement the proposals before the House so that the discussions will bear fruit? Does he agree that the proposed reorganisation is not a message for any local authority to increase its spending?

Mr. Baker: I agree with my hon. Friend's last point. I have already said that during the transitional period some control will be necessary to ensure that certain local authorities do not take the opportunity substantially to increase their spending. I also note the point that was made by him and by several of my hon. Friends, that they want the Government to get on with this.

Mr. D. N. Campbell-Savours: May I congratulate the Secretary of State on his admission that industrial rates in the north will go up? I am sure that that will bring a lot of joy to many industrialists in Cumbria. Will the right hon. Gentleman come clean? He has told us who gains. What about telling us who loses? It is all here in the Green Paper. Will he tell us the key statistics about those who lose? Are the losers not several million people?

Mr. Baker: I have admitted quite openly that if the tax base is broadened more people will pay tax. Slightly more households gain than lose. The figures are clearly set out in the Green Paper.

Dr. Keith Hampson: Will my right hon. Friend accept that businesses in the north will look upon what he says as long overdue, because there is a great need to have a uniform business rate and evaluations? Surely it is also long overdue that we get rid of the holdback, the clawback and targets and all the other panoply of the existing system. However, none of those things needs a poll tax. A poll tax is only tolerable if it is small. Will he therefore look again at education expenditure, and particularly teachers' salaries?

Mr. Baker: I was asked about this earlier. I appreciate that many hon. Members feel it would be an easy solution to take a large part of education expenditure off the rates. That would have profound constitutional implications, because one cannot remove the responsibility for financing a large part of expenditure without moving power to the centre. It is almost impossible to devise a scheme. That is a centrist approach and the way the French system works, but it has enormous implications for local government and I would not want it.

Mr. Dennis Skinner: The Secretary of State will not pull the wool over the eyes of the people, however much he might succeed in doing that to some Tory MPs. Successive Secretaries of State have come to the Dispatch Box year after year for the last seven years, and they have all declared that they have a new system of rate support grant that will be wonderful for everybody. The net result is that £16,000 million has been removed by central Government and ratepayers have had to foot the bill. From our point of view this proposal is a little more helpful, because during the course of the Green Paper consultation and up to the next general election we shall be able to tell every constituent in every target seat how much the rates will go up as a result of this latest blunder by the Tory Government.

Mr. Baker: I do not know what has impinged upon the consciousness of the hon. Gentleman. I am not proposing an increase in rates, I am proposing a replacement of rates.

Mr. Eric Forth: Does my right hon. Friend not agree that any system in which 100 voters may vote for increased local expenditure but only 30 of those voters are called to pay for it is utterly iniquitous? What he seeks to introduce is direct accountability between the wish to vote and have a voice in local government, and the willingness to pick up the bill for that vote.

Mr. Baker: My hon. Friend goes to the heart of the matter and I am sure that the country generally agrees with that proposition.

Mr. Jack Straw: If the Secretary of State is aiming to increase local accountability, why is he proposing in the Green Paper to take complete authoritarian control over the capital expenditure of councils? Why is the consultation period so short? The poorest households pay no rates at present, but is it not true that all poor households will be worse of as a result of these proposals? If the Secretary of State can give illustrations by local authority of the impact of a local income tax, why can he not do the same for the impact of a universal business rate and this poll tax by local authority? Is the reason why he is ducking such illustrations the one spotted by the hon. Member for Ludlow (Mr. Cockeram), that business rates and overall burdens in many Conservative


heartlands will rise'? When Conservative Members read the small print of the proposals they will understand that this is yet another own goal by an incompetent Government.

Mr. Baker: When the hon. Gentleman has had time to read the proposals on capital expenditure, he will realise we are putting forward two proposals and consulting on them. He asked about further information. I cannot think of many Green Papers that have contained as much information as this one. If after studying it the hon. Gentleman or local authorities want more information, I will consider their requests and that information can cover the levels of community charges and the effect of the national business rate.

Several Hon. Members: rose—

Mr. Speaker: Order. I will give priority to those hon. Members whom I have not been able to call today when this matter is subsequently discussed.

Standing Order No. 10

Mr. Tony Marlow: On a point of order, Mr. Speaker. Yesterday we had an important and vital debate. It was so important that it was broadcast in its entirety. I noticed yesterday that before it commenced a Member of the Liberal party made an application under Standing Order No. 10. On previous occasions when we have had important and vital debates that were broadcast it is my recollection that precisely the same thing was done. It is not for me to say that the Liberal party is more interested in publicity than in politics. Others may say that. May I suggest, however, that in future, when debates are broadcast, Standing Order No. 10 applications, important though they may be, should come after the debate, particularly as in this case it was a Standing Order No. 10 debate?

Mr. Speaker: I have to take a decision about whether an application under Standing Order No. 10 is in order. It was in order to make that application. It would be the same for any hon. Member who happened to choose that day.

Mr. Dennis Skinner: May I help, Mr. Speaker?

Mr. Speaker: I do not think I need the hon. Gentleman's help.

Mr. Skinner: It is helpful.

Mr. Speaker: If it is helpful I will hear it.

Mr. Skinner: The secret lay in the moving of Standing Order No. 10. When we had the debate on teachers last week, the Liberal party spokesman was so full of the emergency debated yesterday that he said "I support both sides and wish them well". He was trying to put right the mess that he had made only a few days before.

Mr. Speaker: Not all that helpful, but I am grateful to the hon. Gentleman.

NEW MEMBERS

The following Members took and subscribed the Oath:

Right hon. John Enoch Powell, for South Down.
Right hon. James Henry Molyneaux, for Lagan Valley.
Rev. Ian Richard Kyle Paisley, for Antrim, North.
James Alexander Kilfedder Esq., for North Down.
Roy Beggs Esq., for Antrim, East.
Peter David Robinson Esq., for Belfast, East
Clifford Forsythe Esq., for Antrim, South.
James Harold McCusker Esq., for Upper Bann.
Rev. Robert Thomas William McCrea, for Mid-Ulster.
Ken Maginnis Esq., for Fermanagh and South Tyrone.
William Ross Esq., for Londonderry, East
Rev. William Martin Smyth, for Belfast, South.
Right hon. John David Taylor, for Strangford.
Alfred Cecil Walker Esq., for Belfast, North.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Importation of Live Fish of the Salmon Family Order 1986 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Donald Thompson.]

Wages Council Orders Enforcement

Mr. Peter Pike: I beg to move,
That leave be given to bring in a Bill to provide for the automatic prosecution of and the publication of the identity of employers who pay their employees wages below wages councils' statutory minimum rates.
I should like to express my thanks to my union, the General, Municipal, Boilermakers and Allied Trade Union, for its help in preparing this Bill and the case for it, and also to my hon. Friend the Member for Jarrow (Mr. Dixon) who has a considerable interest in the Bill. I recognise that the Bill proposes to strengthen the role of wages councils when, regrettably, the Government have chosen at this time to move in the opposite direction.
Most workers in the United Kingdom have a direct influence on their pay levels by means of negotiation and voluntary agreement between their employers and their trade unions. Even in such cases, unfortunately, some unscrupulous employers, such as Silentnight, break agreements and treat their employees in an appalling way. This Bill deals with those who work in industries where it is difficult to establish collective bargaining agreements, and where workers depend on minimum wages and conditions as laid down by wages councils. At present some 2·75 million workers in over 325,000 establishments are protected by wages council provisions.
My union has always fought hard for lower-paid workers, and will continue to do so. Wages councils have existed in one form or another since 1910. There are now some 25, the largest being in the hairdressing, hotel and catering and retail trades. but there are others which are also very important. It is important to acknowledge that those workers are in low-paid industries, which makes it all the more appalling that some employers fail to pay the minimum wage rates. I must stress that those workers are very often in very low-paid jobs.
To put it in perspective, at 7 October 1985 wages in the hairdressing industry were £50·25 a week, in the makeup and textile industry £60·64, and in the hat, cap and millinery industry £60·84. All the other figures show a similar, appallingly low wage level. They are extremely low wages, to put it mildly—and one could be tempted to put it much more strongly than that.
Many workers in industries covered by wages councils are women whose income is essential to the family. It is crucial that the system works on their behalf and that they get at least the minimum wage fixed by the wages council. It is true to say that many are afraid to complain to the wages council inspectorate as they fear unfair dismissal. Working in small units, they feel isolated and are fearful of pressing for their legal entitlement and just right.
At present, it is easy for the unscrupulous employer to get away with cheating his employees of the wages to which they are entitled. The number of wages council inspectors at December 1984, when the inspectorate had been reduced by one-third since 1979, was 222. It stands to reason that the inspectorate cannot control and check 325,000 establishments with only 222 staff. In 1982, only 6 per cent. of those establishments were inspected, but that figure is misleading as only 40 per cent. of that 6 per cent. actually received a visit. Other employers were asked to confirm by questionnaire that they were not guilty of illegal underpayment. What nonsense to ask the employer to make the return himself.


In 1984 the percentage of those visited improved—it was 6·9 per cent. of the total. That still means that an employer can expect to be visited on average only once every 15 years. Therefore, the risk of being caught is minimal and the attraction to break the law is substantial.
Those key figures of establishments visited in 1984 having been given, it has to be said that 35·6 per cent. of those establishments were found to be guilty of underpayment. It is interesting to note that, as a result of inspection by visit, 12·2 per cent. of all the workers involved were being underpaid and exploited. The number of those checked by all methods, including visits and the return of the questionnaire, totalled 4·4 per cent. From the figures I have given, it can be seen that the responses to the questionnaire confirm an unbelievably low rate of people being underpaid, and this is understandable because, when the guilty are asked to submit their own forms, obviously they will not tell the truth.
Under the Bill it would be essential to have more checks, an enlarged inspectorate and more visits. It is reasonable to assume that a proper inspection, if it were carried out, would prove that the number of workers being underpaid was in the region of 12·2 per cent.
In 1984 the arrears assessed were £2·5 million. That is the amount of money out of which employees have been cheated by their employers. I would go further and say that it was stolen by the employers. The true figure is likely to be three times that amount—money stolen from some of the lowest paid workers in the country. It is time that action was taken to protect them.
What happens to employers who are guilty when they are found out? The answer is, very little. In 1983, of employers at some 9,842 establishments found to be breaking the law, only two were prosecuted and civil proceedings were taken against another five. However, of the debt for underpaid wages exposed by the inspectorate, 25 per cent. was left unpaid by the employers.
The threat of prosecution is minimal even when employers are caught. The Bill aims to remedy that position. It provides for automatic prosecution in any case where the employer has been shown to be paying below the minimum wage rate fixed by the appropriate wages council. It also provides for the automatic naming of the individuals prosecuted. If they have committed an offence, they should be prosecuted. If found guilty, they should be named. That would be a genuine deterrent to prevent employers stealing money from their employees. If such bad employers were named, prospective employees would come to know of them. Their names should be on display in jobcentres so that they might be seen by those seeking jobs. Indeed, the names could also be on show in libraries, town halls and other public buildings.
Combined with an increase in the number of inspectors, the Bill will pose a serious threat to those employers who attempt to rob their workers in this way. I believe that the very threat of the Bill will herald a speedy end to this appalling scandal, and ensure that the workers in low-paid industries receive fair wages and conditions.

Question put and agreed to.

Bill ordered to be brought in by Mr. Peter Pike, Mr. Don Dixon, Mr. Ron Davies, Mr. Tony Lloyd, Mr. Michael Cocks, Mr. Derek Fatchett, Mr. Roland Boyes, Dr. Norman A. Godman and Mr. Tom Pendry.

WAGES COUNCIL ORDERS ENFORCEMENT

Mr. Peter Pike accordingly presented a Bill to provide for the automatic prosecution of and the publication of the identity of employers who pay their employees wages below wages councils' statutory minimum rates: And the same was read the First time; and ordered to be read a Second time upon Friday 21 February and to be printed. [Bill 65.]

Orders of the Day — Social Security Bill

Order for Second Reading read.

Mr. Deputy Speaker (Sir Paul Dean): Mr. Speaker has selected the amendment in the name of the right hon. Member for Plymouth, Devonport (Dr. Owen).

The Secretary of State for Social Services (Mr. Norman Fowler): I beg to move, That the Bill be now read a Second time.
This Bill gives effect to the proposals set out in the White Paper on social security published last month. The White Paper itself followed what has been the most extensive examination of the social security system since the war. It started in the autumn of 1983 with the inquiry into retirement. That was followed by an examination of family support, housing benefit and supplementary benefit. The Bill sets out three major objectives which flow from the reviews.
The first objective is to ensure that many more people in this country should have a pension of their own. What we want to achieve is a major extension of occupational and personal pensions. Over the last 20 years, that occupational pension coverage has remained static. That has been the case not just in the so-called years of pension blight at the end of the 1960s and the early 1970s, as pension provision was debated and re-debated; it has continued to be the case since. The result is that we have two nations in pensions— 11 million who have the advantage of their own occupational scheme, but another nation of 10 million who have no scheme of their own. All the evidence is that people without additional pensions of their own would welcome the opportunity to have one. The Bill makes it easier for both employers and employees to set up new pension arrangement while at the same time preserving the basic pension unchanged and a modified second-tier state earnings-related scheme.
The second objective is to seek to concentrate help in areas where that help is needed. The evidence of the social security review is that the present system fails to do that in a number of ways. The position has changed over the last 20 years. Any diagnosis of need shows that some of the most difficult problems are faced by low income families with children. Families with children now make up more than half of the people living on the lowest incomes — unemployed families, but also low-income families in work. At the same time, there is the totally indefensible position where families can be worse off in work than out of work and where families can lose income as their gross wages rise. Through the family credit proposals and the family provisions of income support the Bill will enable us to direct more help in those areas. It will help us to tackle both the unemployment and poverty traps, and it will enable us to provide more help for disabled people on low incomes who are a group who stand in special need.
The third objective of the Bill is to ensure a simpler system of social security. One of the most common complaints from the public is that the system is at times one of bewildering complexity. This is in the interests neither of claimants nor of the staff who have to administer

it. The Bill will simplify the individual benefits and put income support, housing benefit and family credit on a similar basis.
The Bill will go further than that. It will introduce common rules for the different benefits; and it will also simplify the present complexities of the contracting-out rules for the state pension scheme. The point of the changes is this. Over the next 10 to 15 years we will be introducing a new computer strategy for social security. This will be the biggest computer operation of its kind ever undertaken in this country and its cost will be up to £2 billion. The effect will be radically to improve the service we give to the public. Side by side with those changes, we want to achieve a simpler structure for social security. That, too, will help in providing a better service, and that is what this Bill aims to do.
The first part of the Bill deals with pensions and the first six clauses give for the first time in this country the right to a personal pension. What this means in practice is that anyone, whether they be a member of the additional state scheme — SERPS — or a member of an occupational scheme, can choose instead to have a personal pension. In other words, the pension is personal to the individual and is fully portable from job to job. Personal pensions will be accumulated on a money purchase basis, with contributions qualifying for tax relief. Each person will be able to choose the kind of pensions saving scheme that he wants and the kind of body that he wants to run his savings scheme.
The significance of that last measure is that it will not just be life insurance companies which will be able to provide pension savings schemes, but building societies, banks and unit trusts. That will not only give the public a wider choice and a greater say in how their savings are invested; it will also increase competition between providers of pensions, to the benefit of the consumer.
Proof that that kind of system can work effectively in the public interest comes from the United States. There, a wide range of financial institutions can provide individual retirement accounts and over the past five years the number of retirement accounts has increased from about 4 million to over 20 million. But what has been even more significant is that competition has driven down the administrative charges which the public have to bear and improved the choice for the public.

Mr. Archy Kirkwood: If the schemes are so successful in other countries and increase competition, why is the Secretary of State giving 2 per cent. as an extra bribe, compared with people who are in occupational schemes, to persuade people to move into personal pension plans?

Mr. Fowler: I shall come to that point. It is entirely reasonable to give an incentive over a five-year period to those people who do not have schemes of their own.

Mr. Frank Field: Why?

Mr. Fowler: The 2 per cent. is an incentive given over a five-year period. It seems to be in line with what the public want. If hon. Members study the social security review, they will find that we went to great trouble to find what the public's view was. [Interruption.] It is not the view of the hon. Member for Oldham, West (Mr. Meacher). It is what the people of this country want. We


found that the vast majority of people in this country want a pension of their own. The Bill tries to give them that right and encouragement.
If personal pensions are to provide an additional pension on top of the basic state pension, it is clearly right that people should be able to contract out of the state earnings-related pension scheme. Clause 2 will allow them to do so. The minimum contribution required to qualify a personal pension for contracting out will be the amount of the contracted-out rebate — the reduction in national insurance contributions at present available only to those in salary-related schemes. As an additional incentive to people to set up their own personal pension arrangements, we shall be adding 2 per cent. to the amount of the contracted-out rebate for the five years from April 1988.

Mr. Tony Marlow: rose—

Mr. Fowler: I shall give way when I have finished this point.
The Bill provides for the administrative arrangements for paying over the minimum contributions and the extra incentive to the personal pension of an employee's choice. Those will be paid through my Department. An employer who does not wish to supplement the minimum contribution will simply pay full rate national insurance contributions. We will then pay over the difference between the full rate and the contracted-out rate to the personal pension provider. That will mean that an employer need not, unless he wishes to do so, play any part in the administration of his employees' personal pensions.
The amount of the contracted-out rebate from 1988 will be the subject of a consultation document prepared by the Government Actuary which I shall be issuing shortly. The amount of the rebate is calculated actuarially to reflect the cost to a salary-related pension scheme of providing guaranteed minimum pensions. Clearly, in a contributions-based pension scheme, the concept of a guaranteed minimum pension has not the same application, but an essential feature of contracting out of the SERPS is that the guaranteed minimum pension is deducted from the state additional pension at retirement. We shall reflect that in contracted-out personal pensions by deducting an amount equivalent to the guaranteed minimum pension from the state additional pension which someone with a personal pension will receive.
Hand in hand with choice must go effective investor protection. The Bill, taken with the Financial Services Bill currently before the House, will enable us to achieve a proper measure of investor protection. As clause 2, with schedule 1, provides, a personal pension scheme will be able to be contracted out only if it satisfies proper requirements, and the Occupational Pensions Board will have to be satisfied that it does so before approving it for contracting out.
Personal pension schemes will have to comply with the regulations concerning their investments, the amount of their administrative charges and the calculation and securing of their members' protected rights, which come from the payment of minimum contributions. The bodies providing personal pensions will also be subject to the regulatory framework set out in the Financial Services Bill. In addition, clause 12 provides the powers to control advertising.

Mr. Marlow: I can tell from the complexity of what my right hon. Friend was saying why he wanted to finish the point that he was making.
In response to the point made by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), is it not the case that, even with the additional incentive of 2 per cent. over five years given to the personal pension plan, the individual will have a splendid deal—he will have the choice to provide a pension scheme which suits his own purpose—and at the end of the day, is the taxpayer not better off than if the person were to continue with SERPS rather than have his own personal pension scheme?

Mr. Fowler: Yes. It is in the nation's interest generally that as many people as possible should be building up their own pensions for retirement. My hon. Friend talked about complexity, but the complexity of pensions arises because of the retention of SERPS. As I understood it, the hon. Member for Birkenhead (Mr. Field) had been arguing rather vigorously over the last month for just that.

Mr. Frank Field: No.

Mr. Fowler: It is not only personal pensions that we are concerned to encourage but the spread of occupational pension schemes where there is substantial scope for expansion. Up to now there is no doubt that employers, particularly small employers, have been discouraged from starting new schemes by the fact that only schemes promising a benefit related to salary could contract out of the state earnings-related scheme. That is an open-ended commitment which not all employers can reasonably be expected to take on. The Bill provides an alternative route to an occupational pension.
Clauses 6 to 12 enable pension schemes based on a defined level of contribution—money purchase schemes —to contract out of the state earnings-related scheme. In other words, the test that the employer must satisfy is a contribution test rather than an open-ended benefit test. I believe that that will be a real inducement to employers to set up schemes. It will also give the wide range of bodies offering personal pensions new opportunities to set up pension savings schemes. That can be done for individual companies or for groups of companies and one result is that industrywide schemes are encouraged under these proposals.
In essence, the contracting-out requirements for a money purchase employers' scheme will be the same as those which I have outlined for personal pensions. The minimum qualifying contribution will be the amount of the contracting-out rebate, and the 2 per cent. addition to the contracted-out rebate will also apply.
What this will mean in practice is that someone—this emphasises and underlines the point made by my hon. Friend the Member for Northampton, North (Mr. Marlow) —who now relies entirely on SERPS can, if that is his wish, instead get a sizeable contribution to his own pension at no extra cost to himself or his employer. As an illustration, with a contracted-out rebate of 5·5 per cent., a man on average manual earnings of £170 a week wculd, including the 2 per cent. incentive and tax relief on his share of the rebate, have almost £600 a year to put into his own pension. That is the point that my hon. Friend was making.

Mr. Tony Favell: Is there not one further enormous advantage to be gained from going into a private


pension scheme? Private schemes are funded, whereas the state earnings-related pensions scheme is not. That means that the more people there are in private pension schemes, the better it will be for taxpayers in future generations.

Mr. Fowler: That is substantially correct. There is a point on the whole question of funding schemes, rather than the state pay-as-you-go scheme, to which I should like to refer when I discuss my proposed modifications to the state earnings-related pension scheme. So far as new occupational schemes are concerned, the technical annex published with the White Paper shows that many people could expect to do better by opting for a personal pension rather than by staying in SERPS. On the assumption of a 3·5 per cent. real rate of return on investment, the annex shows how good an investment this can be for everyone of 40 or under.
Clause 11 will ensure that all members of occupational pension schemes and everybody with a personal pension will be able to pay an additional voluntary contribution —that is not a matter of controversy —to boost their pension rights up to the limits allowed by the Inland Revenue. In other words, this becomes a right for the individual, rather than dependent on the decision of the pension scheme.
The remaining clauses in part I provide for modifications to the state earnings-related pension scheme to reduce its costs in the next century. The effects of leaving the scheme unchanged are clearly set out by the Government Actuary in the report published with the Bill. His report shows quite clearly that the earnings-related pension alone will increase in cost from barely £200 million a year now to £25·5 billion in 2033. This means that the total cost of the state pensions scheme—basic pension and earnings-related pension together—would rise from under £16 billion a year now to £49 billion a year in 2033, provided that the basic pension was uprated in line with prices. If, as the hon. Member for Oldham, West advocates, it was uprated in line with earnings, the cost would be almost £73 billion a year — requiring a national insurance contribution of over 27 per cent. That is stated in the Government Actuary's report. I do not believe that, faced with that evidence, any responsible Government can ignore these estimates and predictions.
We know that the cost of the state earnings-related scheme is set to increase sharply. We know that that cost is borne not by a fund which has been invested but on an entirely pay-as-you-go basis by the contributors of the time —our children, young people now starting out on their careers. We know that the ratio of those contributors to pensioners worsens. In other words, there will be an increase of 3·5 million pensioners between 2003 and 2033, while the contributing work force remains the same. We know that if the plans continue unchanged, the decisions of future Governments will inevitably be pre-empted. If those Governments wanted to devote more resources to caring for the elderly, through, for example, the Health Service or social services, the public resources would be already committed.
I do not believe that we should hand that kind of debt down to future generations. It is for that reason that we have modified SERPS so that the emerging cost of the scheme is reduced by about £12·5 billion by 2033.

Mr. Michael Meacher: Will the right hon. Gentleman accept that the Government Actuary's report in no way justifies the conclusions he is trying to draw about the unaffordability of SERPS? Is he aware that the combined employer and employee contributions have, in the six years of this Government, increased by 5·5 per cent.? An increase to 27 per cent. is proposed, which is only slightly more over a 40-year period than has already occurred in the past six years. The right hon. Gentleman has chosen the year 2033, but the report shows that, 20 years on, the 27 per cent. figure falls to 24 per cent. Paragraph 38 of the Government Actuary's report states:
Growth in real earnings tends to hold down the projected contribution rate.
The only reason it is as high as 27 per cent. is simply because the Secretary of State in this Government is assuming an economic growth rate of only 1½ per cent.

Mr. Fowler: That intervention was very revealing, especially the first point. The hon. Gentleman was clearly saying that we should be concerned about the 27 per cent. national insurance rate because that was something that the nation would be able to afford. I do not believe that that is a fair representation of the position. However, it sets out starkly what the hon. Gentleman is prepared to see in the extra burden of national insurance and of tax.
It is true that after 2033 there is an evening-off, but we have to get through the period from 2030 to 2033. If the hon. Gentleman's position is that 27 per cent. national insurance rates are OK, doubtless this will not cause him any problem, but most people in this country will find it a problem. Paragraph 42 of the Government Actuary's report shows that the modified state earnings-related pensions scheme will mean that national insurance contribution rates will remain constant, but, if SERPS is left as it is, contributions will go up by some 20 to 30 per cent. above current levels.

Mr. Meacher: Will the right hon. Gentleman accept that his latter point only applies because the Government are assuming economic growth forecast rates of half the level with which the Chancellor of the Exchequer likes to regale the House? If it were a 3 per cent. rate, the 27 per cent. joint contribution rate would be nowhere near that level. The rate would probably be in the low twenties.
Will the right hon. Gentleman take on board another point in the Government Actuary's report? Paragraph 36 states:
The notional rate of contributions to the national insurance fund in 1986–87 on the same assumptions as in the long-term projections regarding unemployment proportions contributing etc. would be 15·7 per cent.
The table below shows that, in 2053, the rate is 15 per cent.—lower than it is now. How can that be such a problem? Does the right hon. Gentleman accept that the other corollary of his argument is that he is proposing to cut the level of the additional component by half in the next century?

Mr. Fowler: The hon. Gentleman is getting excited, but he always does. He is misrepresenting what the report says. It cannot be denied that there will be a substantial increase in the cost of the state earnings-related pension scheme. No one, apart from the hon. Gentleman, is seeking to deny that. It means also that national insurance contributions will go up. No one, apart from the hon. Gentleman, is seeking to deny that. During that period, the ratio of contributors to pensioners will decrease. I do not


think that even the hon. Member for Oldham, West is trying to dispute that. There will be 3·5 million more pensioners, and the number of contributors will remain the same.
The hon. Member for Oldham, West cited one assumption from the Government Actuary's report. There is a range of others, including an unemployment assumption of 6 per cent. All the assumptions in the Government Actuary's report are not uniquely unfavourable.
I am sure that we shall debate these issues in Committee. I shall certainly serve on that Committee. I should like to correct one report in The Guardian today which suggested that the Government were unwilling to have the hon. Member for Oldham, West lead the Opposition in Committee. It is the united wish of the Government that the hon. Gentleman should lead the Opposition in this matter.
I should emphasise that the changes will not affect those nearest to retirement. The changes to SERPS do not affect anyone retiring this century. The rights of anyone retiring up to 1999 are entirely unchanged, while there is a period of transition up to 2010. At the same time, the basic pension remains unchanged by any of these proposals.
The Bill will reduce the cost of the state earnings-related scheme in three ways. First, additional pension rights under the state scheme will be based on a lifetime's average revalued earnings, rather than on the best 20 years, as now. This puts the state scheme on a par with the guaranteed minimum pension from occupational schemes. We recognise that special protection is needed for those who are bringing up children or are looking after someone who is disabled, or who are themselves disabled. In these cases, these years will not be counted in the working life over which earnings are averaged.
The second change is that the earnings-related pension, and the guaranteed minimum pension from contracted-out schemes, will in future be based on 20 per cent., rather than 25 per cent., of average revalued earnings. All rights built up between 1978, when the state earnings-related scheme started, and 1988, when the changes in the Bill will take effect, will be honoured at 25 per cent.
The third change concerns a requirement on contracted-out pension schemes to inflation-proof guaranteed minimum pensions once they are in payment. The state additional pension is fully protected against price rises and, because people get the difference between that and their guaranteed minimum pensions, the state effectively inflation-proofs the guaranteed minimum pension. Discussions with employers and pension interests in the wake of the Green Paper convinced us that it was reasonable to require contracted-out schemes to undertake a limited amount of inflation-proofing.
The Bill therefore provides for contracted-out schemes to inflation-proof guaranteed minimum pensions in payment up to a ceiling of 3 per cent. a year. The state additional pension will remain fully protected. Similarly, annuities from contracted-out money-purchase employers' or personal pension schemes will be increased in line with inflation up to the 3 per cent. ceiling.

Mr. Roger Freeman: My right hon. Friend knows that Conservative Members strongly support all his personal pension proposals. My right hon. Friend proposes to offer this excellent incentive to occupational pension schemes which become contracted out after 1 January

1986. I am sure that we shall want to return to that point to examine its implications. Will my right hon. Friend briefly confirm that occupational pension schemes and final salary schemes have played and will continue to play an important part in the provision of private sector pension schemes?

Mr. Fowler: That is an entirely fair point. The Government are seeking to provide further options With respect to pensions. We are not saying for one moment that money purchase is the only route. Clearly, there are many excellent final salary schemes. We are saying, however, that for small employers there are sometimes disadvantages in setting up an occupational pension scheme. We are providing extra options for occupational pensions and personal pensions. Of course, the good final salary scheme will remain. We shall support it.
The second part of the Bill covers the three income-related benefits — income support, which will replace supplementary benefit: family credit, replacing family income supplement; and housing benefit. Clauses 19 to 21 basically bring together all three income-related benefits and put them on a common basis. That is a move of major importance. Much of the inequity and complication of present arrangements lies in the different rules for different benefits. At present, for instance, allowances for children are provided at different levels and on different structures in each benefit. The Bill will seek to put that right. All three benefits will be assessed on the same basis. Because we envisage family credit rates keeping ahead of those for income support, we tackle the unemployment trap.
The common basis of assessment will be net income. People will be assessed on income after tax and national insurance contributions have been paid. That will end the position where a reduction in benefit as earnings rise can actually leave people worse off. The use of net income will therefore virtually eliminate the worst of the poverty trap, where marginal tax rates can be in excess of 100 per cent.
Income support will replace supplementary benefit and will be a significant improvement on it. In particular, it will tackle the complexity which bedevils the present system and which is one of the reasons why supplementary benefit requires 40,000 staff to administer it. Income support will be based on standard rates rather than the array of weekly additions and the system of single payments. But those rates must clearly reflect the general needs of particular groups.
Income support will seek to achieve that. It will consist of a personal allowance. In addition, there will be a family premium plus addition, as now, for each dependent child. Premiums will be added to the allowance for pensioners — with a higher premium for the over-80s — and disabled and lone parents. An extra family premium will be paid for each disabled child in a family.
We have recognised throughout that, however well designed a general scheme may be, there is no way of anticipating special or emergency needs. People will still face losses because of sudden or unexpected crises. A domestic crisis may mean large, unforeseen spending. There will still be people who find difficulty in budgeting.
My hon. Friend the Minister for Social Security, who chaired the inquiry on supplementary benefit, will say more on this matter and on income support when he replies; but it is to meet these needs that we are proposing the social fund, with which part III deals. The aim of the fund is that we should be able to respond to individual


needs and circumstances. It seems to us that it is not possible to achieve that aim within the context of a detailed regulatory structure — like that for income support —which is linked to a formal adjudication system. Instead, local social fund officers will have the flexibility that a regulatory structure will deny.
These officers will be operating within the framework set out in clauses 32 and 33. As part of that framework, I shall issue directions and guidance to them, which will be published. I shall set up careful monitoring arrangements to ensure that the fund is operating properly. There will be a review procedure where a decision is challenged. This will be designed to ensure that the case has been handled properly and in accordance with my guidance.

Mr. Andrew Bowden: I submit that the social fund officers will have a difficult task. I appreciate that it is right that they should be able to judge individual cases and have considerable flexibility. What worries me—I hope my right hon. Friend the Secretary of State will comment on this — is that inevitably one could get two similar cases in different parts of the country judged by two different social fund officers coming up with different conclusions. In the light of that. will he consider whether there should be a fall back position which would enable applicants, under certain conditions, to apply for an independent tribunal?

Mr. Fowler: I understand the concern and feeling on the issue. We will listen to the arguments during the debate. I am seeking to have a review process which is essentially local and which deals with the cases locally, personally and urgently, rather than going to the elaboration of the adjudication process that we have at the moment. I am open to argument on that. It may be that other hon. Members will wish to put forward alternative suggestions on how it could be done, and the Government will listen to the arguments.

Several Hon. Members: rose—

Mr. Fowler: I am conscious that I am liable to go on for a long time if I give way to everyone but I shall give way to the two hon. Members.

Mr. Frank Field: As the Secretary of State says that the aim of the social fund is to meet individual needs, how can he guarantee that that objective will be met with the cash limit to the fund?

Mr. Fowler: I am concerned that, whatever the budgeting arrangements, there should be no question of turning down applications because, for example, a local office has run out of money in mid-year. We will maintain contingency arrangements to meet unexpected demands which put great pressure on the allocation of individual offices. I can give that assurance to the hon. Gentleman.

Mr. Charles Kennedy: On the right to independent appeal on the social fund, I am sure that the House notes that the Secretary of State is willing to take suggestions from hon. Members. He must already know about the document published this month entitled the
Special Report by the Council on Tribunals.
The council is chaired by Lord Gibson-Watt and includes, as an ex officio member, the Parliamentary Commissioner

for Administration. Does the Secretary of State not consider it a damning statement when the report says, on the lack of an independent appeal:
The Council on Tribunals believe this proposal to be misconceived",
and stresses:
It would abolish a right of independent appeal which has existed for over 50 years."?
Why does the Secretary of State have to listen to further comments when he has something as authoritative as that?

Mr. Fowler: The hon. Gentleman must understand that I have not only read that but I have talked with the council and with Lord Gibson-Watt. We are concerned to find a means whereby such a decision can be reviewed without the elaborate adjudication system that currently exists. The reason for that is that the sort of decisions we are talking about are local, personal and urgent decisions. As I have made clear, I would much prefer that to be reviewed in a different way. In other words, I am not seeking to say that there is not a case for a review; clearly there is. I am saying that the debate should be about the kind of review that there should be.
The payments for maternity and funeral expenses for people on low incomes, for which clause 32 provides, will be grants. There will be no question of recovery from the applicant, although funeral expenses may be a charge on the estate of the dead person. as they are now. It is also our intention that payments given under the general heading of community care—for example, to make it possible to keep in the community or bring into the community someone who might otherwise be in long-term care — should also be in the form of grants. Other payments would normally be recoverable loans, but they would be recoverable by deduction from weekly benefit subject to sensible rules. I once again stress the aim of making the administration of the social fund as flexible and responsive as we can.
The family credit scheme, which is to replace family income supplement, is set out in clauses 19 to 21. The House will accept that family income supplement was always intended to be short term and small in scale. I do not believe that it has been satisfactory or that there is a case for leaving family income supplement as it is. I believe that family credit is a much more effective way of helping low-income working families. We would expect twice as many such families to benefit from it as do now from family income supplement, and we expect to spend some £200 million more a year on it.
Entitlement to family credit will be based on net income. The maximum credit will consist of an adult credit plus a child credit for each child. Clause 27 will provide for payments of family credit by the employer through the wage packet. There is an important point: in 60 per cent. of cases we expect payment to be simply an offset to tax and national insurance contributions. In other words, the visible tax burden will be reduced or eliminated. Payment through the wage packet marks a genuine step towards greater co-operation between the tax and social security systems, which many hon. Members on both sides of the House would want to see. Where both parents are working more than the 24 hours a week needed to qualify for the credit they will be able to choose in whose wage packet it should be paid. Let me stress that the payment of child benefit will be unaffected and will continue to go directly to the mother.


The illustrative figures which we published with the White Paper show what family credit will mean to working families on low income. We expect nearly 400,000 working families to be better off as a direct result of the change.
On housing benefit, our major aims are greater coherence with the other income-related benefits, and a simpler system. The number of tapers — the rate at which benefit is withdrawn as incomes rise—will be reduced from six to two, one each for help with rent and rates. By treating employed and unemployed people alike, we shall get rid of the two separate systems which at present exist in housing benefit and also eliminate housing benefit supplement.
The clauses set out the framework for regulations which will determine the shape of the housing benefit scheme. Clause 28 provides for regulations which will enable local authorities to modify the housing benefit schemes for war pensioners in particular. Clause 30, which is based on current legislation, sets out the framework for funding housing benefit through subsidies. It includes, in subsection (4), a power which will enable me to help authorities with the one-off costs which they may incur in implementing the new arrangements.
Clause 20(5) repeats the existing power to prescribe a maximum payment for housing benefit. That power—as is the position now —could allow the Government to require every householder to contribute towards their domestic rates. The Government made clear in the White Paper our commitment to the principle that every householder should bear some of the cost of providing local services; but the House has now heard the proposals announced today by my right hon. Friend the Secretary of State for the Environment to undertake a much wider reform of local government finance. This includes the proposition that all adult residents — not just householders — should contribute to the cost of local services.
The proposed social security structure will have to be developed in the light of the discussions on the Green Paper. One option would be to extend the present rebate arrangements to the proposed new community charge. That could be done only after introducing new primary legislation. As stated in the Green Paper, the Government will need to consider that and other options as the debate on the local government proposals develops. It is clearly right that the current provisions should remain flexible while the House considers those linked issues.

Mr. Donald Stewart: I am grateful to the Secretary of State because he has given way a good deal. Age Concern Scotland brought to our attention the figure for the sum that the old would have to contribute towards their rates. Is he aware how unfair that could be to people in Scotland, where the average rating is double that in Wales?

Mr. Fowler: It was exactly for such general reasons that I said that it was right to consider the different options for rates and the rebate system, whatever it may be.
That is also one of the reasons why the detailed figures that we have provided to illustrate the effect of the reforms of income-related benefits can do no more than that. They are illustrations of the possible effects on one set of assumptions. It would be foolish to set benefit levels so far in advance of the start of the scheme. They will be settled

in the autumn of 1987, along with the uprating of benefits generally, which will take place at the same time as the new arrangements are introduced.
We have, however, made it clear that we intend to spend substantially more on family credit than is now spent on family income supplement. The income support rates are overall ahead of the present rates of supplementary benefit and weekly additions. We have also made it clear throughout that we intend a reduction in the scale of the housing benefit scheme.
Part IV covers benefits under the Social Security Act 1975. The main provision, in clause 34, is to replace the existing widow's allowance with the tax-free lump sum widow's payment of £1,000. The payments for maternity and funeral expenses under the social fund will mean realistic help when it is needed for the groups who need it most. This is a more effective form of provision than the present inadequate and virtually universal maternity and death grants, which are abolished by clauses 35 and 37. The maternity grant has been the same for 17 years, and the death grant at its present level of £30 for 19 years—only £10 more than when it was introduced in 1949.
At present, my Department administers some 30 different benefits with their own often complex and different rules. There may be good reasons for some differences, but in too many cases the differences arise simply because the benefit system has grown piecemeal. In themselves, the differences can be a serious source of confusion for claimants and staff alike. Throughout the social security review, it has been our conviction that more can be done to provide common rules for common, general purposes. Part V tackles that problem directly.

Mr. Andrew F. Bennett: rose—

Mr. Fowler: I am sorry but I shall not give way again.
Part V brings into line many of the different rules that at present exist. In particular, it applies common rules to the time for claiming and paying benefits, and to the recovery of over-payments. The Bill also brings together the rules of adjudication so that they are broadly the same for all benefits.
One aspect of the simplification is streamlining the legislation. Clearly, the new schemes will be easier to understand if people can find the relevant legislation and powers in one place.

Mr. Bennett: Will the Minister give way on that administrative point? How many sets of statutory instruments did the Secretary of State's Department issue last year? Will he confirm that, under this measure, more statutory instruments will be issued each year, and that scrutinising them will place a considerable burden on the House?

Mr. Fowler: I understand the hon. Gentleman's interest, but his intervention confirms me in my view that I should not have given way. His statement is inaccurate, and deals with precisely the point that I am coming to.

Mr. Bennett: How many?

Mr. Fowler: The hon. Gentleman should not get so excited. If he will wait a moment, I shall reply to him.
Our object has been to describe the main structure of the income-related schemes in the Bill. That is both clearer and more detailed than, for example, the present housing


benefit legislation, which contains the broadest of regulation-making powers. Historically, income-related schemes, because of their nature, have relied more heavily on regulations than the contributory benefits. That is not a matter of historical dispute. They are quite properly more subject to change to meet changing needs. Our aim has been to strike a balance between a clear indication in main legislation of the basic purpose and structure of these schemes taken together, and retaining the necessary flexibility in their administration.
The regulations, like those for housing benefit now, will be subject to the negative procedure, as will those for income support and family credit, but we recognise that both Houses will want to scrutinise and debate the detailed proposals for the introduction of the three income-related benefits. The Bill provides for the regulations to be subject to the affirmative procedure when they are introduced.
Another aspect of the simplification is a reduction in the number of regulations. In the clauses covering income support, we are reducing some 20 regulation-making powers for the present supplementary benefit scheme to about 15. Part V carries that simplification further forward. Clause 41 alone, for example, will replace 61 regulation-making powers exercised in 15 sets of regulations with 20 powers to be exercised in one set. Clause 52 will bring the uprating of benefits, which at present is covered by an order and 12 sets of regulations, under one order and one set of regulations.
Those changes will make social security legislation more compact, clear and manageable. They will also make the system as a whole easier to computerise. The scale of social security makes it essential that we have a modern system providing the modern service which the public are entitled to expect. The reforms in the Bill will create a structure which lends itself to that. Hand in hand with those reforms goes one of the most ambitious computer strategies ever undertaken in this country. That strategy is the key to modernising the management of social security.
The reforms set out in the Bill are fundamental. They follow the most comprehensive review of social security since the last war and the most detailed ever consultations with the public. They propose a new framework for social security which will serve the public better in the future.
For years hon. Members on both sides of the House have spoken eloquently of the need for reform, but a Government must do more than simply recognise the problems in social security. They must put forward solutions, and set out a programme for action based on clear principles and with clear objectives.
In the Bill we have a programme which will confer new rights in pensions. We will set the pensions of the future on a sound basis, and we will give to millions of people new opportunities in planning for their future. We have a programme which cuts through the unnecessary complexities of much of social security, and concentrates on what should be its central aim—directing help to those who need it most. We have a programme which will tackle the most notorious aspects of the unemployment and poverty traps, and which will give more support to disabled people as well as to those low-income families who too often face difficulties today. That is a programme for reform which deserves the support of the public.
The House cannot turn its back on the problems that undeniably exist. Our responsibility is to act. In order to take the action that is needed, I ask the House to give the Bill a Second Reading.

Mr. Michael Meacher: The Secretary of State for Social Services concluded his speech by saying again today that the Bill is the culmination of the biggest review of the welfare state since Beveridge. Such a grandiloquent claim deserves to be tested. There are six fundamental criteria by which any genuine reform of social security—and the Opposition agree that reform is necessary—should be judged.
First, any real major reform of social security should bring about a greater measure of social justice and fairness in society.
Secondly, it should be rooted in an independent assessment of need with benefit levels pitched at an adequate level to meet those needs and thereby enable people freely to participate in the life of their communities.
Thirdly, the review should be based on the aim of preventing poverty arising in the first place, through the collective pooling of risks and resources, not merely based on the relief of poverty.
Fourthly, the review should be designed to give independence to individuals and families. It should not trap them into dependence. People should, by their own efforts, be able to re-establish themselves—as I am sure they would wish—as contributors to society.
Fifthly, any genuine reform of social security would reduce means-testing which is bureaucratic and expensive for the state, inhibits full take-up of entitlements and is highly stigmatising and demeaning for the individual.
Sixthly, since the tax benefits interface represents different facets of a single integrated system, social security reform should be inseparable from reform of the tax system and the whole operation of the fiscal welfare state.
I submit that the Bill fails on every one of those counts as it is not concerned with greater social justice. Cutting benefits by over £750 million and redistributing a smaller cake among the same poor groups is the opposite of increasing fairness. There has been no assessment of need whatsoever. Instead there is simply a black hole in the middle of the Government's scheme. There is no minimum or bottom line, no principles or statements of what income for British citizens is minimally adequate to meet needs.
There is nothing new in the Bill that will help to prevent poverty. The Bill is based on the narrowest possible role of social security in relieving poverty and it will not help people to get back on to their own two feet. Indeed, the social fund's repayable loans and the requirement on even the poorest in our society to pay 20 per cent. of their rates bill will undoubtedly drive people deeper into poverty and debt.
So far from reducing means-testing, the Bill will certainly increase dependence on means-testing by abolishing the death grant and the maternity grant and by reducing widows' benefits and additional pensions. There is no linkage in the Bill with tax reform. Contrary to what the Secretary of State said towards the end of his speech, the number of workers in the poverty trap will actually increase under the Bill by about 125,000.


It is not simply the whole strategy of the Bill that is at fault. There are two other fundamental criticisms to be made of the Government's handling of the exercise. The Government systematically ignore and directly repudiate known public opinion on virtually every proposal in the Bill. The contrast with Beveridge could scarcely be more stark. In 1943 Beveridge observed:
The main result of studying the volume of evidence is to show how much agreement there was, even before my report was made, upon all its main principles.
By comparison, the Fowler Green Paper attracted near unanimous hostility. Yet despite that, hardly any of the original proposals were significantly changed, either in the White Paper or in the Bill. The Secretary of State talked about consultation, but I suggest that the idea of a public consultation exercise has been exposed as a fraud. In the one area where the Government have significantly been forced to change their tune over the abolition of SERPS they have substituted alternative proposals for which, as far as I know, there is not a shred of public sanction or support.

Mr. Freeman: Rubbish.

Mr. Meacher: I suggest that the matter should be put out to public consultation and we will then know. That has not happened.

Mr. Fowler: Before the hon. Member for Oldham, West (Mr. Meacher) goes off about public consultation, would he like to remind the House what happened under the Labour Government? The hon. Gentleman may even have been a Minister at the DHSS at the time. When the Labour Government examined supplementary benefit, did they not send a group of officals around the country? Is that how the hon. Gentleman proposes that public consultation should be carried out? What does the hon. Gentleman mean?

Mr. Meacher: At least the public officials took account of public opinion and at least they produced changes — a framework of entitlements which the Government inherited in 1979–80 which were an enormous improvement on what existed before and from which the Government are now departing. That is different from holding a framework of public consultation and then systematically ignoring everything that the public said.
The other fundamental criticism of the construction of the Bill that has already been mentioned and upon which I shall elaborate as it is important is the extraordinary arrogation of power into the hands of the Secretary of State as proposed in the Bill.
The Bill has no substance. Rather it is a licence for government by regulation. Under the Bill the Secretary of State is granting to himself unprecedented power to change benefit levels in future without using legislation. He will be able to cut and sabotage the benefit system without consultation, with minimum parliamentary scrutiny and, indeed, without notice. Clause 33(10) of the Bill shows the flavour of the open-endedness and the all-embracing nature of the Secretary of State's self-ascribed power. It states that—
An officer shall determine any question under this section in accordance with any general directions issued by the Secretary of State, and in determining any such question shall take account of any general guidance issued by him.
If the detailed plans by which he intends to use his regulatory and direction-giving powers are not published now or in the course of the Bill, the Bill degenerates to the

status of little more than a constitutional facade. The Opposition expect the full regulations to be made available before the Bill reaches the end of its Committee stage.
Moreover, the existing checks on the arbitrary use of power by the Secretary of State are being weakened. The Bill strengthens the Secretary of State's powers to avoid referring proposals for prior scrutiny by his own advisory committee, the Social Security Advisory Committee, the Industrial Injuries Advisory Committee and the Occupational Pensions Board. Appeals to the commissioners on grounds of fact regarding unemployment, maternity and sickness benefit are to be abolished. Appeals on single payments are to be replaced by internal reviews by civil servants administered under the social fund arrangements and the Secretary of State, not the adjudicating officer, will in future have the power to decide claimants' rights to benefit. That last provision goes a long way towards eliminating the right of appeal.
In effect, the measure is another Bill in that centralising and authoritarian mould that has so much been the distinctive hallmark of the Government over the last few years. I want to make it absolutely clear that the Opposition unequivocally reject the revised proposals on SERPS which reduce its value by nearly half—by no less than £12 billion — by the next century. The Secretary of State sought to justify that huge cut by claiming that it is unreasonable to impose such an unsupportable burden—in his view—on our children. It is the Secretary of State's proposals which will be so unfair to our children. Under his proposals our generation will still get the full SERPS pension, unaffected by the Bill, and our children retiring next century will not. They will suffer from all the penalty clauses in the Bill.
I put the question back to the Secretary of State. Does he think it fair that our children should be forced to support us at the full pension rate of SERPS while we at the same time legislate under the Bill to prevent them having the same advantage? My reading of human nature is that most people are perfectly willing to contribute generously to others as long as they know that they in their turn wi11 get the same advantage. But I also believe that people deeply resent being forced to contribute to others if at the same time they are then denied the same advantages themselves, particularly if those who will be denying them those advantages are those of whom they have been the benefactors. How can the Secretary of State possibly justify that?

Mr. Fowler: Very easily, if I might say so. As the hon. Gentleman rightly says, the Bill does not change SERPS for those who are nearest retirement. It is important that that is underlined and that the public understands that no one who retires this century will be affected by these proposals because clearly those who are nearest to retirement will find it most difficult to build up a pension. It gives those who are retiring in the early part of the next century the opportunity to build up a pension of their own. The hon. Gentleman has only to go to the technical annex to see the estimates of those pensions. He will see that the own pension that we are providing for the public is an extremely good deal for the public.

Mr. Meacher: I shall come to that point because I have evidence to show the exact reverse.
The Secretary of State talks about people wanting their own pension. What they want is a good pension. It makes


no difference to them whether it is provided in the state or the private sector. What matters to them is its value. That is the crucial point.
The Secretary of State has not answered the point that I was making, that we are imposing on our children, about whom he is allegedly so concerned, the burden of supporting those of us who remain within the SERPS scheme at the full level of benefits now, but they will not get that same benefit from their children thereafter. They will be substantially disadvantaged. It is our children who will be the main losers under the Bill.

Mr. Martin M. Brandon-Bravo: Will the hon. Gentleman give way on that point?

Mr. Meacher: I want to move on. I have a great deal to say.
We reject the Government's revised SERPS proposals because they will drastically curtail pensioners' living standards next century and because such detrimental action is anyway unnecessary. I say advisedly that it is unnecessary because — I think that this puts it in a nutshell as best I can—in the past 30 years the number of pensioners in Britain has risen by 150 per cent. and their share of total disposable income has doubled from 7 per cent. in 1951 to 15 per cent. in 1985. SERPS sought to increase pensioners' share of disposable income by just 5 per cent. over 40 years—by any standards, a modest goal compared with what has already been achieved since the war. Therefore, I can say with great certitude—we can support this statement—that there is no question but that SERPS is perfectly fundable without any unreasonable strain on the economy. The Government Actuary has produced no projection which suggests otherwise.
The Secretary of State has sought to make great play today with his claim that by 2035 the burden of pensions on the working population will be too great. But independent experts have suggested that the critical factor is the overall dependency ratio, that is, taking account of the number of children as well as the number of elderly people relative to the working population. That is a fact that the Secretary of State did not take into account. Calculations by Professor Bernard Benjamin of the City university's actuarial science unit show that
even on extreme assumptions … the overall dependency ratio will not be much larger than it was in 1951 when, unlike now, manpower was in short supply.

Mr. Michael Stern: Is the hon. Gentleman seriously suggesting that the Government, however respected the professor is, should base their plans on predictions of the number of children that will be born in 30 years' time?

Mr. Meacher: That is certainly one answer, but this is an exercise that the Government Actuary, as well as the Secretary of State and anyone who seriously thinks about this, has to take into account. We are talking not just about in 30 years' time but over the next 30 years. Certainly the overall dependency ratio is critical. It is not just the number of workers relative to the number of people in retirement that is important; it is also the other part of the dependent population—children. Estimates have to be made and can be predicted demographically within a margin of error. This is what I am saying and that, I think,

is right. Therefore, I repeat that the case for any cuts in SERPS, let alone the cut of 50 per cent. in the Bill, has not been made and is unwarranted.
The changes in the Bill, if carried through, could have a devastating effect. The technical annex of the Green Paper which the Government have issued shows that by the time a man retires, having contributed to modified SERPS throughout his working career from age 16, he will get a pension which will be little more than the present value of the basic pension alone as a percentage of earnings. I repeat that because it is an important assessment. He will get little more than the present value of the basic pension alone as a percentage of earnings. Indeed, the measure of the pension cut in the Bill is that for those remaining in the state scheme the gap between pension and earnings will be made even wider than it is now—
Precisely what SERPS was intended to remove or reduce.
The truth is that the Fowler proposals are deliberately designed to make the SERPS scheme so unattractive that it can no longer compete with private pension schemes. That is precisely the message of the tables in the technical annex. In almost every case personal pensions and occupational money purchase schemes yield a better pension than SERPS as modified under the Bill.
What is so deceitful about the technical annex is that it omits comparisons with the unmodified SERPS— the scheme as it is now. I put down a question to obtain those figures and they were finally given in Hansard on 17 January at column 746. They showed that for most people the present SERPS scheme offers pensions distinctly better than those obtainable in the private sector. That is true even though the technical annex gives illustrative figures for private pensions based on optimistic rates of return over prices of 3 per cent., 3·5 per cent., and 4 per cent. If a more realistic 2 per cent. rate of return is assumed, the figures look worse still for private pensions.
It is for that reason, because the comparisons with the present SERPS scheme are so bad for the private sector, that the Government are now trying to tilt the balance back by offering a substantial bribe— I repeat "bribe" — to those transferring to private schemes between 1988 and 1993. They are offering a contribution rebate of 2 per cent. of earnings, to be paid for, unjustifiably, by the rest of the working population.

Mr. Fowler: The hon. Gentleman is simply mistaking the position. Is not the significant point about the table not only the comparison—if the hon. Gentleman takes the rebate plus the 2 per cent. incentive—but that the return on, say, 3·5 per cent., or even less than that, on 3 per cent., for someone aged 60 now who is a low earner, about whom the hon. Gentleman talked, from an occupational or personal pension is not only better compared with modified SERPS but also better compared with full SERPS—the kind of SERPS scheme that he advocates?

Mr. Meacher: In most instances that is not the case —the only possible exception is the male high earner. That is a distinct category but for most people that is not the case. The right hon. Gentleman has fiddled the figures by assuming a rate of return that is historically unjustified. If we take a more realistic figure and exclude this substantial rise for which the rest of us will have to pay — as we have paid for the discount on council house sales—there is a different picture.
There is no pension scheme that provides a better pension level for the vast majority of those in it than


SERPS, especially for women, for long-term unemployed, the sick and disabled and those who are unable to complete a full-time working life. Members of private schemes will no be immune from Fowler's cuts. There is a crucial policy change which is not openly stated in the White Paper or the Bill —the abandonment of the 1979 commitment given by this Government to increase the basic pension in real terms as standards of living rise. The White Paper and the technical annex both assume that the basic pension will be frozen in real terms. Thus if real earnings rise by 1½per cent. annually the basic pension will be no less than halved as a percentage of earnings by the time a 16-year-old reaches retirement. That loss will hit all pensioners whether their second-tier pension comes from SERPS or from a private scheme. The losers will be counted not in millions but in tens of millions.
The present proposals for the social fund are utterly unacceptable.

Mr. Freeman: Will the hon. Gentleman give way?

Mr. Meacher: On the social fund? I do want to move on. I know the hon. Gentleman has considerable interests and when he makes his speech I shall listen attentively. The Secretary of State spoke for 55 minutes and I do not want to do a disservice to the House by taking as long as he did.
As for the social fund, compared with the present funding of single payments, the budget is being cut back sharply. The Government have not told us by how much and it would be helpful if the Secretary of State would say what the total budget for the social fund will be. I will gladly give way if he will do so. Last year, it was £260 million on single payments. What will the budget be for the social fund? It is a important omission from the Bill and if the Secretary of State will tell us I will gladly give way.

Mr. Fowler: I have already made it clear to the Select Committee on Social Services. I find it extraordinary that the hon. Gentleman should refuse to give way to my hon. Friend but invites me to answer. I have made it clear to the Select Committee, whose Chairman is here, that the decision will be taken later and will be taken in the light of circumstances. There is no mystery about it.

Mr. Meacher: That is the usual waffle that we have come to expect from the right hon. Gentleman when he is caught in a difficult corner. Leaked documents—they may or may not be correct—have suggested that the figure would be £100 million which represents a 60 per cent. cut. It would be helpful if the Secretary of State would say whether that is true.
If there are substantial cuts many people in real need will get nothing—even if they do get something it will be in the form of a loan. To repay that loan a claimant will be driven, for the first time by any Government, below the supplementary benefit poverty line. That must drive families deeper into debt. There will be recourse to charities but their incomes are declining. The present social services will be pushed into the role of a secondary poor relief agency, which is not what it should be doing. The social fund, which is discretionary and cash-limited, will move support back into the era of the Poor Law. It is akin to sealing the valve on a pressure cooker while keeping the heat on. I make a prediction that sooner or later, under these proposals, there will be an inevitable explosion.
There will be no access—unless it is written into the Bill later—to independent appeal by claimants against the decisions of the local Department of Health and Social Security officers. For that reason the normally staid quango the Council on Tribunals is absolutely outraged. In a special report issued a few days ago the council describes the proposals as
the most substantial abolition of appeal rights since the council was set up in 1958.
What the council objects to is not just the loss of the right of appeal but more basically that the officials who administer the fund will not be accountable to anyone.
The Secretary of State says that, after all, he is in favour of some kind of review. If he has discussed this with the Council on Tribunals, why is it not in the Bill? Why do we have to wait for these matters when it has already been fully discussed?

Mr. Andrew Bowden: The hon. Gentleman knows my views about tribunals. Does the hon. Gentleman agree that it is important that the local officers, the social fund officers—who we all accept will have a difficult task—should have significant flexibility and should be able to use their judgment and experience in studying individual cases? One of the difficulties which I find and which I suspect is shared by many hon. Members is that when cases go to the DHSS and we make special appeals on behalf of constituents, the manager often does not have the necessary flexibility to deal with cases. I hope and believe the social fund officers will have that flexibility.

Mr. Meacher: I respect the hon. Gentleman's views. The situation has arisen precisely because this concept was tried up until 1980. There was discretion but there was great difficulty in standardising it for the reasons the hon. Gentleman has given in earlier interventions. There then followed S manuals with thousands of loose-leaf pages which changed continually. Untrained clerks found it extremely difficult to operate the system fairly and uniformly throughout Britain. We therefore switched to the system which was brought in by the Government in 1980—a framework of rights. Now we are to switch back. All the disadvantages which persuaded the Government to make the change in 1980 will reappear. This time the difference is that there will not be the amount of money available to show the discretion and flexibility which we all agree is necessary.

Mr. Favell: Will the hon. Gentleman give way?

Mr. Meacher: No; I must get on.
Our main objection to the income support proposals is that they divide the poor into the deserving and the undeserving with the unemployed marked out as the undeserving. They are the only major group for whom there is to be no premium. A Policy Studies Institute survey published this month shows that poverty is much more heavily concentrated on unemployed families with children than on any other group within the population. The survey shows that about half of the couples on supplementary benefit run out of money most weeks before their next giro arrives. More than half have experienced acute anxiety about money problems. More than half, both parents and children, were missing items from a basic wardrobe and more than half were in debt. Yet it is on this group that some of the heaviest losses are being concentrated.


Indeed, I read in the papers that the Secretary of State is even pursuing this group to the point that he is close to an agreement with the building societies to stop their mortgage interest payments being met when they are forced to claim supplementary benefit. That is gratuitously callous and can only lead to eviction and homelessness. Other key groups in poverty will lose badly under the new income support proposals.
The technical annex had the gall to suggest that lone parents will gain from the change to the tune of £1·70 a week. That is illustrative of just how tricky a document it is. One must assume that the Government have deceptively taken lone parents with no heating or other additions, no subsidiary housing costs, no single payments and in receipt of short term benefits to arrive at this conclusion. If all of those points were taken into account, there would not be a gain, but a whopping loss of about £13 a week.
The worst hit will be the disabled who even this Government might have been expected to regard as deserving. A severely disabled person might at present receive a domestic assistance allowance and a diet and heating allowance adding up to something over £56 a week. The Bill would replace that with a premium at a level for a single person of £12·25 or, for a married couple, of £17·45 a week. The loss of £40 to £50 a week for a severely disabled person can be described as little other than catastrophic. It will force a considerable number of disabled people out of their own homes against their will and into institutions. Moreover, the state will incur substantial extra cost in providing residential care costing some £200 to £300 a week. My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), the country's first Minister with responsibility for the disabled, will express his great anxiety about these measures.
The Bill is not about the reform of welfare: it is primarily about cuts in welfare—nearly £1 billion of them, affecting nearly 4 million people, most of them pensioners. Before the Secretary of State disagrees, let me say that there is one tell-tale piece of evidence which reveals the Bill's true nature. Every major welfare Act of the past half century has had at its heart the commitment to promote the welfare of those in need. That was the central message which was stated explicitly in terms in the Unemployment Act 1934, the Old Age and Widows' Pensions Act 1940, and was evident in the establishment of the National Assistance Board in 1948 and of the Supplementary Benefits Commission of 1966, and the passing of the Supplementary Benefits Act 1976 and the Government's Social Security Act 1980. It is of the greatest significance, now that discretion is being brought back via the social fund, that for the first time in 50 years any such commitment is completely absent from the Bill. I suggest that the omission is more than symbolic. It is an indisputable sign that the Bill's real meaning is the repudiation of a welfare society in favour of a return to the Victorian traditions of the Poor Law.
The Bill represents a hallmark of the type of society that the Government really believe in. The Government may claim to believe in owner-occupation for all, but swingeing cuts in housing benefit for poorer owner-occupiers belies that. The Government claim to believe in community care, but the pointed lack of any premium for

carers and the huge cuts in domiciliary financial support belie that. The Government claim to believe in law and order, yet they produce a social fund which will be a cauldron containing a lethal mix of destitution, despair and, possibly, violence. The Government claim to believe in helping the poorest, yet unemployed families with children and the severely disabled—some of the very poorest people —will be badly penalised by the Bill. The Government claim to believe in incentives, yet the number of families in the poverty trap with a more penal marginal tax rate than company directors will increase by 250,000 under this Bill. The Government claim to believe in the family, yet by insisting on paying family credit to the man through the pay packet they reveal that they are far more concerned to reduce wages than to tackle family poverty.
This is an unpleasant and damaging Bill, inspired by some of the ugliest Thatcherite instincts. In view of the crumbling erosion and eclipse of Thatcherism which we are now witnessing, there is no future for the Bill. It never had any political mandate and it commands no popular support. If passed, it will be an electoral millstone. Like the Government, it must and will go.

Mr. Francis Pym: It seems clear from the speech of the hon. Member for Oldham, West (Mr. Meacher) that the Bill will generate a great deal of controversy. It certainly includes a great deal of detail on social security and therefore the Committee stage will be extremely important. I had the impression, listening to the two opening speeches, that this Bill is an ideal example of one on which a timetable at the outset would be advantageous.
I wish to speak not about the details of the Bill, important though they are, but about the broad context of the Bill. In the debate on the Loyal Address, speaking about domestic policies, I referred to the social objective of policy—improving standards of care and service—and the economic objectives of policy—providing that care and service as cost effectively as possible. I referred to the balance that must be struck between those two objectives.
In the particular field of social security, looking into the future and using the technology that is now available to us, I see those two objectives being brought remarkably close together because it will be possible to organise a much better system and to administer it much more efficiently. Unfortunately, the Bill takes no significant steps in that direction. To be fair to my right hon. Friend, he did not produce the Bill with the intention of making major steps in that direction. I should like to press him to go much further.
The Bill is essentially a continuation of the constant piecemeal amendment of the methodology that we have had for 40 years. The complexity of the present arrangements has been demonstrated clearly by the speeches of my right hon. Friend the Secretary of State and the hon. Member for Oldham, West. When the present system was introduced 40 years ago, it was based on clear principles and established facts, beginning with well researched estimates of family means and family budgets. Those estimates had been much discussed for many years. No such estimates exist in contemporary society, however, and no such estimates exist as a background to the Bill.


The rates of benefit today are the result of decades of ad hoc adjustment and quite a long way removed from any well-researched foundation in fact.
The Bill is yet another range of adjustments, some beneficial and others not. We know that there are gainers and losers. My right hon. Friend claimed that it represents some fundamental change. I find it very difficult to see how that point of view can be maintained. That is why there will be so much controversy about it. A genuinely fundamental reappraisal is essential in view of the huge social and economic changes and of the huge new opportunities that are now available. My criticisms of my right hon. Friend's Green Paper, his White Paper, and of the Bill are that they provide evidence of the need for a new framework, a new philosophy and new principles to govern our provision of social security in the circumstances of today.
We know that we are not dealing adequately with poverty. We shall not be able to deal with it adequately until we agree to define it in an up-to-date way. The first requirement of an effective social security system is that it should alleviate poverty and hardship and try to prevent them. That can be done only if benefits are based on objective, up-to-date calculations of the needs and the costs of families of widely varying compositions. No such calculations exist today. I urge my right hon. Friend to set that work in hand. That is an essential preliminary to the creation of a modern, effective social security system.
There are other requirements, but I will mention only a few. One requirement is a strong and positive incentive to work. An end to the poverty trap is a clear need, because that trap acts as a major disincentive. People must be encouraged to earn, which means that they must be able to enjoy the benefits of their labours. We must discourage state dependence, encourage self-reliance, and make it worth while to work.
We must promote family life and sound social values. The extent to which we subsidise single mothers and marriage break-ups is a cause of the increasing number of lone parents, which any sound policy and strategy must seek to discourage. I do not speak against their needs, but we require a Bill that encourages families.
Yet another requirement is that the system must be simple to understand and simple to administer. The present system is neither of those things, because circumstances are much changed. The Bill does not bring about any significant improvement. That is especially shown in part V, and clause 41 in particular, which envisages a collection of rules, which I expect will be indeterminate, uncertain to some extent and capable of different interpretations in different places and in different circumstances. Selectivity is nice in theory, but it has difficulties in practice.
I wish to make three recommendations to the House as to how we should proceed in future. First, the Government should not rest upon the Bill. They should move forward and institute a review that we can all accept as a major long-term, fundamental review that encompasses all forms of state benefit and all aspects of direct personal taxation. The continued separation of those elements is a main cause of the present complexity and incoherence. There must be a planned relationship between benefits and personal taxation. I should like those elements to be integrated, but if it is proved that that is going too far, there must at least be a planned relationship. I believe that intégration is possible and will prove to be the correct policy.
All benefits and personal taxes should be the responsibility of one Department. I am aware that there is considerable resistance to that proposal, which is perhaps human, because Departments have their own interests. However, that resistance must be dispelled.
The process of taking money from those thought capable of affording it by means of taxes and of giving benefits to those who are judged to be in need are two sides of the same coin. Today, those processes are still considered separately. It is high time that they were brought together. I do not know whether the Green Paper on personal taxation that is to be introduced by my right hon. Friend the Chancellor of the Exchequer on Budget day will go in that direction, but I hope that it will.
The review would be appropriate for a Royal Commission, which is out of fashion these days for no good reason except that it might produce a report that did not say what the Government wanted. I do not mind how it is done or what the body is, but we must choose the vehicle that will provide us with the best answer.
My second recommendation is that the whole approach to the modernisation and recasting of the social security system should be broadly based across the political spectrum. Obviously there will be political argument and controversy, as there should be. However, the objective is to secure maximum public consent. Political differences cannot be eliminated altogether, and I do not suggest that anyone should try to do so, but to allow a major issue to become a party political football would be a negation of statesmanship. Many of our education problems derive from the abandonment of the broad agreement on education that used to exist between the parties. It is sad for our children that that is not true today.
In social security we deal with the lives and needs of individuals and families. It is our duty to make not only the best provision, but to provide a simple, understandable and stable system which is not subject to constant change as a result of any war between political parties. The British people deserve better than that.
My final recommendation is that the so-called basic income approach should be taken seriously. That is the most hopeful way forward. A basic income approach or any other approach is not a panacea. There is no panacea. I shall not detain the House by describing the basic income system, with which many hon. Members are familiar. However, the system is simple to understand and to administer. It deals with the poverty and unemployment traps. It alleviates and even prevents poverty. It encourages positive social values and provides an incentive to earn. The system's problem is its cost. If, under careful examination, it is discovered to be too expensive, even a partial basic income scheme would be a huge improvement in modern circumstances.
I ask for a more far-seeing and far-reaching approach to our social security system. It is time that we stopped tinkering with it. Today's statement on rates shows a fundamental approach to that problem. I wish to see a similar approach in this area. I suspect that some speeches in tonight's debate will contain ample evidence of the need for a totally new approach to this vast and vital topic.
I should like the review or Royal Commission to conduct its work in public. It will take time for people to grasp the issues involved. It is important that they grasp and understand the issues, because millions of people are directly affected. We wish to take those people with us. It was largely all the discussion and the time and trouble


taken in the 1930s and 1940s that led to the extraordinary measure of agreement throughout the country when the welfare state was finally introduced. That is a good principle and a good pattern to follow.
The process of complete review is long. It lasts for more than one Parliament. I urge my right hon. Friend, in addition to the Bill and all the work he is doing, to make a start on that gigantic process now.

Mrs. Renée Short: The House will have been interested to hear the thoughtful speech of the right hon. Member for Cambridgeshire, South-East (Mr. Pym), and I am sure that his plea for more time to consider the proposals and to return with better ones will be echoed in the hearts of many people inside and outside the House. Many of the representations that I have received from individuals and an enormous range of voluntary organisations have been highly critical of many of the proposals in the Bill. They also criticised the Green Paper and the previous White Paper.
As the Secretary of State and the Minister will know, the Select Committee on Social Services has been heavily engaged in examining the proposals for the reform of social security. First, it considered the proposals in the Green Paper, then those in the White Paper and, more recently, the Bill. We were given very little time to carry out that enormous and complicated programme, and only today have we published the minutes of evidence of our session last Wednesday with the Secretary of State and the Minister.
In our report on the Green Paper, we urged the Secretary of State to prepare his new proposals for reform with great care, giving plenty of time for consultation. The original proposal was that the changes would be implemented in April 1987. Except for maternity and funeral expenses, the period has been extended to April 1988. We are glad that we shall have a little more time for consultation on the operational details, but I wonder why the Government are rushing ahead with the Bill. It seems to be undue haste since more time has been given for consultation.
The Bill affects many areas of policy and will be affected by other changes. The proposals to reform the rating system may have a major impact on housing benefit; payment of family credit through the wage packet will be affected by the long-awaited proposals for the reform of personal taxation; the proposed worrying changes in students' entitlement to benefit must be related to the student grant, which is the responsibility of the Department of Education and Science; and other proposals seem to conflict with Government policy on home ownership and housing improvement. The Government do not seem to have taken those interactions fully into account, but since they have more time to consider the matter, they can do so.
The first part of the Bill deals with pensions. Despite the Select Committee's firm recommendation that legislation on pensions should be delayed pending further consultations, the Government are pressing ahead. We have had only 44 days to examine the completely new proposals put forward in the White Paper for a modified

SERPS. Those changes will have effects well into the next century, so they must be properly thought out and proper time must be given for this.
It is disappointing that the Bill contains no proposal for a flexible age for retirement. I remind the House that, four years ago, the Select Committee produced a report on the age of retirement which proposed that we should work towards flexible retirement based on a notional pension age of 63 for both sexes. At the time, the Government accepted our recommendation. Why does not the Bill contain some provision for it? I hope that this matter will be raised in Committee. If the Government shilly-shally for too long, the European Commission might have something to say about it. I hope that they will take the point on board, because I know that the Secretary of State has received much critical comment on the matter.
The Bill also deals with income-related benefits. In our report on the Green Paper, we welcomed the broad structure proposed by the Government, provided that it gave people adequate weekly incomes as of right. But we pointed to some areas that needed further thought. The Government have modified some of their proposals in the light of recommendations from the Select Committee and from outside organisations. We are pleased that all couples will now receive the over-25 rate of income support and that families with more than one disabled child will receive an extra family premium for each disabled child.
The Government have expressed their determination to do more to help families with children. We welcome the proposal for a family premium for families on income support. Unemployed families with children are the poorest in our so-called prosperous society, and the Prime Minister should give some attention to that section of our community. However, assuming, as the Bill does, a family premium of £5·75, the Government's figures suggest that families on income support will, on average, gain only £1·40 a week. That takes no account of what they will lose after the abolition of single payments. If the Government want the family premium to go a long way to helping poor families with children, they must put it at a much higher level than £5·75. I hope that they will be more generous.
The Government hope to help low-income families by replacing family income supplement with family credit. The fact that it is based on net income and so will avoid the worst of the poverty trap has been welcomed. But more controversial is the fact that it will be paid through the wage packet—so usually to the father rather than to the mother — not to the parent who has primary responsibility for the children. I hope that we can persuade the Secretary of State to reconsider that proposal.
The Government have expressed the admirable intention of doing more for the disabled. The Select Committee welcomed the idea of a disability premium for disabled people on income support. However, we voiced our concern about severely disabled people, who at present may receive £20 or £30 a week in additional requirement payments. It cannot be right that they should have to go to the social fund for their everyday needs. I hope that the Secretary of State will reconsider our proposal for a two-tier disability premium.
The Select Committee was also worried that disabled people who do not receive severe disability or long-term incapacity benefits will be ineligible for the disability premium. It may not be a large group, but it is important


that those people do not lose out. I hope that the Secretary of State will change the rule, because it will adversely affect the disabled.
It is disappointing that the income support proposals do not take more account of the needs of pregnant women. In several reports, the Select Committee has shown its anxiety about the widening gap between the perinatal mortality rates for classes I and V. Mothers on income support will get less to cover their maternity needs than at present: they will receive about £75 from the social fund instead of the £25 universal maternity grant and, on average, about £60 in single payments. I hope that the Secretary of State will reconsider the amount of help that can be given with maternity expenses.
In its report on the Green Paper, the Select Committee gave a cautious welcome to the idea of a social fund, while stressing that it needed much more consideration. That criticism still applies. Claimants can now apply for grants to meet special needs, but under the social fund they will be replaced largely by loans. That has serious implications for poor families. For many years, in my constituency, poor families have been helped to get the basic necessities of life by the understanding and speedy action of the DHSS officers in Wolverhampton. I pay a warm tribute to them for their unfailing help and for doing their best for many distressed, anxious and bewildered people, coping with what to them appeared to be insuperable problems. Those officers must be allowed discretion to give grants, not loans, where they believe it appropriate. I hope the Secretary of State will take that point on board as well. To enforce repayment of these loans is a retrograde step, and I hope the Secretary of State will think again about that, because to try to get more money out of poor people to repay loans for things they urgently needed to retain their quality of life seems inhumane.
It is said that the Government's proposals for the reform of housing benefit will produce a better and simpler system and will save something like £450 million. The proposals have been drawn up without a proper comprehensive review of housing costs, and the rent and rates rebate system has been considered in isolation and without looking at taxation, rent levels or housing policies generally. That also seems to be a retrograde step.
This is the second time in five years that major changes in housing benefit have been introduced without proper analysis of the needs involved. Many of the Government's proposals will involve employers in the administration of social security allowances for their employees. Employers will pay out family credit and statutory maternity allowance and will be concerned with employers' contributions for personal pensions. That involvement is highly objectionable to many people including, it seems, the members of the CBI who sent a sharp note to the Secretary of State. How will the Secretary of State take all these objections on board?
Some of the proposals contained in the Bill are good and some of them are extremely bad. A great deal remains unclear. Most of the important changes are not spelt out in the Bill, but will have to be brought in at a later stage, presumably by regulations and by subordinate legislation. So much is unknown and uncertain in the Bill, which relies on what has gone before in Green and White Papers, that in many respects the House is being asked to sign a blank cheque. That cannot be accepted and I am sure that hon. Members on both sides of the House will want to express their anxiety.

Mr. Roy Galley: We on the Government Benches must welcome the two contributions from the Opposition Benches. The hon. Member for Wolverhampton, North-East (Mrs. Short) has given a balanced speech based on the work of the Select Committee. The hon. Lady put forward a carefully constructed catalogue of criticisms. Nevertheless, she said that some parts of the Bill are good, and that is a welcome admission from the hon. Lady. The hon. Member for Oldham, West (Mr. Meacher) would have been better advised to take the more balanced approach of the hon. Lady. As usual, he rather over-egged the pudding and on the basis of his performance one feels that as long a the Welsh windbag and the Lancashire loony loom large upon the Opposition Front Bench, England need not tremble because not enough people will be foolish enough to cast their votes for such a concoction of Opposition spokesmen.
In a balanced debate, there has to be an admission to the good things in this Bill. There has to be a major improvement in the net income assessment as a common criterion for many of the benefits. I welcome the alleviation of the poverty and unemployment trap with the abolition of marginal rates of taxation of 100 per cent. and more. One must also welcome the considerable additional help for those who are seriousluy sick, and a fair income support system that will be more readily understood and a direct help to those most obviously in need.
The Bill proposes a more equitable and more easily understood housing benefits system. Family credit will have a better chance of helping many low-income families and will allow greater scope for trying to increase and improve the take-up of that benefit. Many considerable advantages will flow from this Bill and one must welcome also the genuine consultation exercise. My right hon. Friend has taken on board many of the points made to him. It is a tribute to him that he has made such a major change on SERPS between the Green Paper and the Bill. He has taken on board a number of the points made in the Select Committee report, in particular the point about a higher rate of benefit for under-25-year-olds with children on income support, and the separate rate and rent tapers in the housing benefits scheme.
Having given that general welcome to the Bill, I should like to mention two aspects about which I have an axe to grind. Obviously, under any form of supplementary benefit it is difficult for people to make ends meet. Although, in terms of total national income, our social security system is exceedingly generous, single pensioners often have difficulty in making ends meet. There has to be a considerable differential between single and married pensioners, but very often single pensioners have much the same overheads for housing and heating and general maintenance as a two-person household. Of course their housing costs are taken fully into account when they are entitled to supplementary benefit, but there are other inelastic overheads which cause single pensioners to have a rather harder time.
My right hon. Friend will say that the single person's pension is 60 per cent. of the married couple's pension, and that that general principle operates throughout the system. He will also point to the premium arrangements in the Bill which suggest that a little more will be given to the single pensioner household with premium rating. It


may now be opportune to look more carefully at the income coming into a single household and into a two-person household to make sure that we have got it right for single people.
The Green Paper proposed a presence test for those in receipt of income support. It said there should be a nationality and/or residence qualification for the receipt of benefit. That proposal has been omitted from the White Paper and the Bill and I hope that my right hon. Friend will reconsider that omission. In some respects this is a complex area and one needs to deal with the differing circumstances of settlement and of visits. For people settled here, either permanently or for extended periods, we have reciprocal arrangements with a series of countries and there are special arrangements within the EEC. The special EEC arrangements apply to the employed, the self-employed and national insurance pensioners.
Specific benefits, primarily contributory benefits and some disablement benefits, are covered by the agreements. There are no legal requirements to give the main non-contributory benefits, primarily supplementary benefits, to EEC nationals in Great Britain. There is also a series of reciprocal agreements with non-EEC countries, which vary in detail from one agreement to another. In the main, they apply to contributory benefits and seek to protect contribution records and entitlements as people move from work in one country to work in another. Noncontributory and income-related benefits are not usually within the scope of these reciprocal agreements, so that in principle a presence test would not conflict with the reciprocal agreement.
With the exception of people covered by reciprocal agreements, it would not normally be possible for people coming here to settle to obtain contributory benefits, unless such people were the dependants of people who had an adequate national insurance contributions record. The main benefits where a presence test could be applied will be non-contributory benefits, primarily income suport. One may be able to extend that to housing benefit, family credit and one or two other benefits.
In principle, supplementary benefit is available, as income suppport will be in future, to anyone in Great Britain who satisfies normal conditions for eligibility. It is wrong that someone should be allowed to settle here and that the long-suffering British taxpayer should have to pick up the tab for benefit immediately on his arrival. There are arrangements for the sponsorship of entrants to the country where a person or persons can give undertakings to maintain the sponsee. Such arrangements are by no means universal. One way to apply a presence test might be to make such arrangements compulsory and universal if the entrant is not able to maintain himself.

Mr. Jeremy Corbyn: Is the hon. Gentleman aware that many dependants come to this country to stay legally with relatives who give an undertaking to maintain them while they are living here but who later find, because of low pay or because they have to live on benefit themselves, that they are unable to maintain their dependants? Is the hon. Gentleman seriously suggesting that we should condone penury and poverty because of the application of immigration laws to social security legislation?

Mr. Galley: What I am saying is that it seems unreasonable that many people should, on arrival on our shores, be able to claim immediately supplementary benefit and that the British taxpayer should have to pick up the tab. Alternative arrangements are possible. Sponsorship would be one way of coping with the difficulty. Many countries will take no one for settlement without a work permit. So we have a much more generous system than other countries.

Mr. Corbyn: rose—

Mr. Galley: If the hon. Gentleman will allow me to proceed with my argument, I may be able to answer some of the points which he wishes to raise.
In general, visitors to this country or overseas students cannot obtain benefit, but that rule has not been applied to all EEC nationals. A limited number of supplementary benefit payments have been made to EEC nationals, although the number has been reduced in recent years. Stricter rules are in operation to stop abuse and only to allow the payment of benefit to those seeking work.
Visitors should not be able to obtain benefit paid for by the taxpayer when there is no appropriate reciprocal arrangement. If people are genuine visitors, they should be self-supporting. If they are seeking work, they should be sent back home because we do not have enough jobs for all our people who want work. There is no apparent legal reason to give a non-contributory benefit to a casual visitor from the EEC or elsewhere. There may be cases where exceptions should be made—for example, with political refugees—but usually it will be possible to deal with exceptions under the regulations covering urgent cases.
People have been rightly resentful when scandals have arisen—as, for example, with holidaymakers from the EEC who have claimed benefit during a holiday in this country, and the recent case of the wealthy Nigerian family who were maintained for a time at the ratepayers' expense. The Bill provides an opportunity to clarify the law and to make a blanket legal requirement that someone should be resident here for at least 12 months before being able to claim benefit, unless he is covered by appropriate reciprocal agreements.
It may be argued that that would put us in bad odour with our European partners, but, as I have demonstrated, we have no legal duty on non-contributory benefits. It may be argued that it would be administratively expensive, but surely it could not be more expensive than the labyrinthine regulations which exist already. It may be argued that such a rule would leave this country open to accusations of racism. That could not be sustained, because the rules would apply whatever the nationality of the person concerned. They would apply to all visitors; they would apply to that half of settlers who come from the old Commonwealth and foreign countries as well as to that half who come from the new Commonwealth.
I urge my right hon. Friend to insert in the Bill a provision for a presence test, at least for income support and preferably for a wider range of benefits. That would simplify the system and would be fairer to the British taxpayer.

Mr. Archy Kirkwood: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:


this House declines to give a Second Reading to a Bill which seeks to reform pension policy without first securing an all party consensus on the proposals; which, whilst reducing the long-term cost implications of the State Earnings Related Pension Scheme, fails to reflect adequately the pension requirements of the low paid and to increase the state retirement pension; which cuts housing benefit whilst at the same time requiring claimants to meet 20 per cent. of their rates bills; which introduces the concept of a cash limited social fund involving local discretion and no right of appeal; and which fails to make sufficient progress towards the integration of the tax and benefit systems.
I wish to explain why the Liberals and the Social Democrats are asking the House to decline to give a Second Reading to the Bill. The reasons are stated ad longam on the Order Paper. That enables me to make a shorter speech.
Two principal items in our reasoned amendment were referred to effectively by the right hon. Member for Cambridgeshire, South-East (Mr. Pym) when he talked about the need for consensus and for a fundamental review, following the logic of his argument, of the integration between the tax and benefit systems. Obviously the right hon. Gentleman has been called away urgently to the Dining Room, but I shall use my best offices to make sure that the Committee of Selection nominates him to the Standing Committee which will deal with the Bill. There is obviously a great deal of competition to become a member of the Standing Committee. I look forward to the right hon. Gentleman being able to expand on both those points more eloquently and with more experience than I could in Committee.
The reasoned amendment is not exhaustive, otherwise a much longer Order Paper would have been needed to accommodate it. The revision and modification of the state earnings-related pensions scheme are being done to the prejudice of the lower paid and some other disadvantaged groups. The state retirement pension is not at an adequate subsistence level, as it should be; steps should be taken to put that right. If we had been in a position to influence matters, we would have given that high priority.
In the amendment we have referred to cuts in housing benefit, to the requirement to meet 20 per cent. of the rates bill of people on supplementary benefit, and to the social fund being cash limited, discretionary and not subject to appeal. All those important items have been referred to in the debate.
In the context of the background of the Government —the House is entitled to draw conclusions from this—I am intrigued that in 1982, before the election, quite spirited public debates took place about Conservative views on the development of what was then called family policy. Views were expressed in the Cabinet policy review committee and the family policy unit at No. 10 about how the Conservatives were dealing with the public expenditure problems. Only a few short months later we had an election, but the Conservative manifesto did not face up to some of the important questions that were being asked. Some of the issues were ducked.
As soon as the election was over reviews were instituted by the Secretary of State. We supported the reviews as far as they went, although we were anxious because they were to be nil cost reviews. As a result of the reviews this Bill has been brought forward which will insinuate all the reforms neatly within one parliamentary Session, if the Secretary of State is lucky. He has come here beating his chest like Tarzan—it is a pity about the spectacles—and talking about the consultation process. A lot of paper was moved around, but many people felt that it was one-way

traffic with very little being given by the Government. Although the Government may well have been listening, there has been no exchange of views. The conclusion that the House may draw from the way the reform is being done is that the Secretary of State is afraid of an election.
The main changes are to be implemented in April 1988. Why does not the Secretary of State get the Bill on the statute book and leave it? Why does he not fight the election on the basis of the Bill and implement it afterwards? Nobody could then say to him that there had been some evasion of these very difficult issues — I agree that they are difficult issues—at the hustings. If he did that, he would get my support and I would consider what he has to say with greater care.
I listened very carefully to what the Secretary of State said about the rationalisation of the regulations. It was news to me, and I listened with interest. If it happens, I will welcome it, but the Minister must understand that the Standing Committee will labour under tremendous difficulties because of the lack of detailed regulations. The only way in which the Committee can work sensibly is for the Department to do everything in its power to supply detailed notes on clauses which, as we all know, are of great assistance to the members of the Standing Committee. If he does not do that, the whole thing could become a charade.
The Secretary of State's aim, stated in his foreword to the White Paper, is to make the system simpler. I do not believe that it is possible to do so, and to achieve better targeting, at no cost. It is a contradiction in terms. An attempt to improve the targeting implies an effort to take individual circumstances into greater account. The Government cannot make the system simpler unless they put more resources into it. We all know—and there may well have been valid reasons for it — that the Government have, if anything, taken resources out of the system in the past six years. So the possibility of simplicity is a chimera. It is impossible to achieve it against a background of no cost. The Secretary of State would receive warmer support from me for much of what he is doing if he were able to lubricate—to put it no higher than that—the wheels of his reform with a little extra money.
I would add that if the Secretary of State is looking for simplicity he should not be going about de-indexing and reducing child benefit, because if he wants a simple, effective and cheap way of delivering benefit there is no better way than that.
I turn to a very important point which will be considered again in Committee. The Policy Studies Institute has been looking at the effect of the reforms, with single payments being withdrawn in favour of the income premium, and is very worried about it. At present, on average, families with children gain about £3 a week from single payments. One-parent families get a little less, and pensioners and families without children much less. As I understand the system, table 17B of the technical annex suggests that in future families with children will, on average, gain only £1·40 a week. If we add to this the negative figure of £3 which they receive at present and which will be withdrawn, we end up with a net loss of £1·60 a week.
The Government are trying to target families with children—they say that they have the greatest need—but


because of the way in which the single payments interface with some of the proposals for income support they will achieve precisely the opposite in some circumstances.
There is evidence that there will be massive regional variations in how this will affect people. A report of the Northern Ireland Assembly shows that, of every 1,000 live cases in Northern Ireland, 720 involved single payments. The average payment was £113 per case. That differs from London, where the figure is only 240 to 250 single payments per live 1,000 cases, and where the average payment is £80. In Scotland, in which I have an interest, 702 live cases out of every 1,000 rely on single payments, and the average payment is £110.
It is very difficult to deal in averages. The statistical annex is a minefield of trouble when we talk about averages, if we do not take care. I hope that if this sort of regional imbalance shows up, the Government will take steps to deal with people in regions like Northern Ireland —and this Bill is getting precious little attention from hon. Members there; they are apparently interested only in their civil war, as far as I can see. I want the Government's assurance this evening that they will seek to deal with them.
The system is supposed to be more financially secure in future. I agree with that aim. At the time, in 1975, as the Secretary of State knows, we took the view that we were storing up financial troubles for ourselves in the future. But the Government have adopted a position where they now appear to break the consensus. They seem to be saying that the welfare state is now predicated only on economic growth and development. To some extent, that is true, but the obverse of that argument is that, for social cohesion to persist and for the economy to have the advantage and benefit of that social cohesion, some resources will have to be put in. Yet the general tone and tenor of the Government and the way in which they have acted in the past does not augur well for that.
We will look at the pensions proposals very carefully. The modification of SERPS is not my preferred solution, but I give the Secretary of State my assurance that in the course of debates in other places we will deal with it as constructively as possible. On the social fund, as referred to by my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy), the Committee on Tribunals has the most authoritative argument that I have seen against the present refusal of the Government to have some sort of inbuilt, independent appeal system. As I read the document, it appears to me that the present proposal goes as far as saying that ministerial accountability will be denied. That is to say, if I have a constituent whose case is reviewed locally and is given a duff decision, I cannot complain to the Minister. If that really is the case, we are in trouble. I should like the Minister to clear this up when he replies to the debate.
Turning to the 20 per cent. rates contribution, I deliberately sat through the statement on the Green Paper this afternoon and I listened very carefully to what was said, because the Secretary of State, dealing with questions when the Green Paper was produced, implied very strongly that everything would sort itself out in the wash and that we should not worry about it too much because the changes in train for local government

financing would deal with that point. I heard nothing this afternoon to make me any more sanguine that people on supplementary benefit will not be lambasted by this.
The clause on this subject should not be in the Bill. Arguments about local accountability are fine. Local accountability is important, and we should deal with it, but not in this Bill, not through social security. There are other ways which can be pursued in other places. It is iniquitous to include it in the Bill
The most important thing is consensus. It is certainly crucial in the pensions industry. There has been much argument about whether there should be two separate Bills and about the way in which some of the changes have been brought forward without proper discussion in the industry, particularly the new 2 per cent. bribe that was foisted on us. However, I give the Treasury Bench an assurance that in the course of discussions I will seek to be as constructive as possible, because if we cannot achieve agreement on the system we shall not get agreement on benefits. One party may well think that more resources should be devoted to this; another party may feel that fewer should be given. I will bend over backwards to help achieve consensus because it is in everyone's interest to do so.

Sir Brandon Rhys Williams: I regret that I cannot give a welcome to the Bill. Of course, there are many good things in it. The Secretary of State and the Minister of State are good Conservatives, good Christian Democrats, on whom, as the House knows, we can all rely for their humanity and competence in everything that they do. But it seems to me that the ship of Cabinet solidarity has beached them, in this Bill, back at Speenhamland, and I am very reluctant to follow them there. They seem to me to have got stuck. I predict that it will not be long before Parliament has to come back to the whole subject, even if this Bill goes through significantly amended and improved.
I realise that my right hon. and hon. Friends will not like what I have to say, but at least I hope they will agree that I have the merit of consistency. I intend to abstain on Second Reading of the Bill and, unless it is drastically amended in the course of its further progress, I shall have no choice but to vote against it on Third Reading.
I object to the underlying principle on which the Bill is constructed. It seems to be quite inconsistent with the Government's own major aims, which we on the Government Benches all support. It also has practical effects which I believe will be particularly adverse to the types of people of whom we have large numbers living in Kensington. These are people who probably would never consider voting for me, so what they may think about the Government perhaps is not of direct relevance, but I am their Member of Parliament, and I must speak up for them.
I hope that I may be chosen to serve on the Standing Committee, although I have substantial criticisms to make of the Bill.

Mr. Frank Field: So have we.

Sir Brandon Rhys Williams: The value of the work of the House is diminished if hon. Members who do not always act as they are directed by the Departments and do not speak on behalf of particular outside interests are regularly excluded, as I have been in recent years, from the work of its major Committees.


The Bill has been advertised as a major reform, and so we have to go back to the basic principles of the redistribution of income. What is the basis of entitlement? We have been over this ground often. Entitlement can be based on need, on a record of contributions or on citizenship. The Conservative party in 1974 and again in its manifesto for the election of 1979 chose citizenship. It chose the scheme which used to be known as the tax credit scheme and what I now call the BIG idea—the basic income guarantee. It supported the idea of one nation in benefit, one nation in taxation. There are many critics of the tax credit or basic income guarantee scheme. They say that it cannot be brought in until the computerisation programme of the Inland Revenue and the DHSS has been completed. Of course, that programme of computerisation could be enormously simplified and accelerated if we got clear our thinking on the subject of the redistribution of income before we put in the computers, instead of afterwards. Therefore, I do not accept that excuse.
There is also no doubt whatever that a basic income guarantee scheme could be introduced on a strictly revenue-neutral basis. It is not true that it has to be postponed to the Greek kalends because it is too expensive and the country cannot afford it. There is no reason why a basic income guarantee could not be introduced in the first instance on a purely revenue-neutral basis. What happened to it in due course could be a matter for the balance of opinion in Britain between taxpayers and beneficiaries as to what would be the right measure of redistribution of income as time goes by.
In the Bill my right hon. Friends pay lip service to the idea of contributions as the basis of entitlement, but in fact the Bill is relying on evidence of need as the principal basis of claim. I find that quite unacceptable. It seems to me to constitute a U-turn by the Conservative party which might be described as the revolt of the strong against the weak.
Selectivity, I know, seems the best way to reduce the marginal rate of taxation while still coping adequately with the relief of hardship; but it has well-known disadvantages. To what extent have my right hon. and hon. Friends been able to overcome them in the Bill?
First, it is divisive because it tends to separate those in need from those in work. It is disincentive, because as a person works to better himself, he runs into very high effective rates of deduction from earnings. It makes thrift unprofitable because saving renders a person ineligible for benefit. As it depends largely on personal casework, it relies on an element of discretion, that is to say, the means test. which may lead to inequality of treatment and real injustice, possibly hardship in certain cases. Also, of course, particularly in the face of Government propaganda for people to stand on their own two feet, it is humiliating for those who have to admit that they have fallen short of self-reliance.
Have my right hon. Friends, has the Department, coped adequately with these well-known difficulties? They have produced palliatives, some of which are ingenious, but I do not think that the Bill meets the underlying problems inherent in the principle which they have allowed to creep in.
As to the immediate problems of the welfare state, I have drawn attention very often — hon. Members on both sides of the House have done so—to the fact that for the moment we have some 8 million people who are reliant on supplementary benefit. Is the figure higher than that now? That is two nations with a vengeance.
We have to do something about this situation. We cannot wait until 1988 or afterwards. We have a huge and increasing black economy. We have a steady loss of sense of community. We have a breakdown of social discipline. We know all these things in the type of inner city constituency which I represent. We have a rising generation lacking in motivation except towards crime.
I do not think that the Bill will alter this underlying situation at all. We also have the administrative problems which are leading to virtual breakdown, in spite of the dedication of people working in the DHSS offices, of the existing system. It is a matter of urgency to tackle this.
Some time ago in a parliamentary answer I learnt that the DHSS has to make more than 90 million manual entries every week in the administration of supplementary benefit and national insurance. It has hived off housing benefits to local authorities, but that reform has still not proved itself to be an administrative success. Now they are bringing employers into the system in the Bill. From the answers that my right hon. and hon. Friends gave in the Social Services Committee on 22 January, which I think should be brought to the attention of all Members who are interested in the subject, it is clear that the administrative problems of this reform are still unsolved. In the Bill there is much too much reliance on subsequent orders which is another way of increasing the powers of the Executive and diminishing the power of the House. I do not welcome that. We ought to have been given the solutions to the problems, not merely an indication that they will be solved somehow outside our field of view.
Today we had a very important statement on the reform of the rates, which I welcome most warmly. However, it seems to me that it will have the effect of bringing millions of small contributors into the rating system. I am sure that will prove impossible unless we have a simultaneous move to the integration of taxation and benefit in some kind of basic income guarantee system.
I wish to say a few words about family stability. The House must be concerned about that. It is not a party issue. I think that returning the payments for children to the wage earners rather than to the mother is a blunder in the Bill. I have seen the defence of this idea which my right hon. and hon. Friends have produced. I cannot accept it. For one thing, there are 7 million reasons why it is a bad idea politically. Apart from that, it is a bad idea intrinsically, and we should stick to the principle that the child benefit belongs to the child but is drawn by whichever parent is directly responsible for the maintenance and care of the child, or by the responsible authority, as the case may be. I do not think it is progressive to put the money back into the pay packet.
We still have the problem that single people will gain at the expense of married couples: two single people living together will do better than if they decide to go through a form of union. I also think that the Government are wrong to retreat from their commitment to maintain child benefit and to continue to make it payable to the mother. As this is something on which much has been said before, I will not elaborate on it.

The Minister for Social Security (Mr. Tony Newton): The White Paper is explicit, as was the Green Paper, that child benefit, as defined, will continue to be paid to the mother.

Sir Brandon Rhys Williams: The Government's policy, plainly, is to phase out child benefit and to rely on


benefits related to need, not to universal benefits. My hon. Friend tries to assure me that that is not so, but I am not confident that I can rely on his assurance. [Interruption.] I am not saying that my hon. Friend is not saying what he believes in good faith. He is not the type of Minister with whom anyone would quarrel on the grounds that he did not speak in good faith.
Last year, when the Government decided not to continue with the uprating of child benefit in line with rises in the real value of the tax allowance from which child benefit took over, that was the first break. Nothing that my right hon. Friends and hon. Friends have said since leads me to assume that from now on child benefit will continue to move upward in accordance with changes in GDP, as I should prefer, or of families' real cost of living.
On the subject of incentives, from a hasty analysis of the Bill it seems that the low-paid in many cases will be worse off than they are now. I realise that if we rely on selectivity we must try to produce clear water between what people receive if they are not working and what they receive when they go out to work, even with low wages. The Government are seeking to raise the tax thresholds, which is understandable, but, simultaneously, they must rely on the reduction in the real levels of benefit to produce that clear water. With that policy, there is a danger of social instability and even explosions, of which we have had too many in recent months. We do not want to create further circumstances in which people will feel alienated from the rest of society.
What the Bill proposes with regard to housing benefit means cutting much too fast a benefit which I admit has also grown much too fast. One could say much more about the way the increase in housing benefit has led to rent increases; but cutting housing benefit too fast will not bring down rents simultaneously. It will merely cause severe hardship to thousands of people in inner London. I represent many of those people. I believe that the reform will still not be acceptable even if it is postponed until 1988. That is relevant to inner city areas such as north Kensington, but I dare say that it is also relevant to many other areas elsewhere with high rents.
Mrs. Hermione Parker has done some analytical work on the Bill's effects which hon. Members should study. Cuts in housing benefit will be felt, in particular, in the areas of highest rents. The Bill represents a redistribution of income from householders to non-householders and away from inner cities in favour of areas where rents and rates are lower. How can the hon. Member for Kensington support such a measure?
I should like to say a few words about the state earnings-related pension scheme and the reform of occupational pensions. The Bill contains some helpful moves in directions which I have advocated for a long time, and I welcome them. However, I made my maiden speech in 1968 on the importance of the transferability of existing pension rights in occupational pension schemes. I might have been depressed had I known that 20 years later we should have made virtually no progress on the transferability of existing accrued rights.
I have pointed out to my right hon. Friends that that movement could have been stimulated by tax changes without any breaches in the basic undertakings under which occupational pension schemes have been set up; but they have preferred not to follow that advice. I am sorry

to say that my right hon. Friend the Chancellor of the Exchequer appears to have truckled to the life offices. I regret that.
With regard to future benefits in the private sector, the move towards the liberalisation of the provision of occupational pension schemes is excellent and one of the Bill's best features, but it should be based on a core of money purchase entitlement. I am always suspicious when I see the introduction of money transfer systems under which some people gain more than they should on the basis of their contribution record, because somewhere we shall find a corresponding element which is not getting what it has paid for.
The basic core scheme should be related directly to contributions—contributions which are enough. What do we find? Employers' contributions in the private sector will be a statutory 2 per cent. only. Many employers will pay much more and indeed already do. Many employees also make their own contributions to the schemes. In the public sector, however, the value of the Government's contribution is about 17·5 per cent. in addition to incomes. That produces a satisfactory rate of pension, but where will we get if the employers' rate of contribution in the private sector is only 2 per cent.? The employers' contribution should be at least 10 per cent. It already is, because at present the employers' national insurance contribution is 10·45 per cent. That money should not just flow into the Exchequer as part of general revenue: it should be seen as the employers' contribution, in addition to wages, to their employees' retirement benefits. Without adequate contributions, the benefits cannot be sufficient to meet social needs.
In all the circumstances, I think that it would be better if my right hon. and hon. Friends were to withdraw the Bill and give the subject a great deal more study. However, if the Secretary of State is not disposed to do that, I hope that he will be willing to make major changes to diminish the worst of its damaging effects.

Mr. Tom Pendry: The House has listened to a brave and cogently argued speech from the hon. Member for Kensington (Sir B. Rhys Williams). I shall begin by agreeing with a few basic and obvious truths. I might as well get my accord with the Secretary of State out of the way as quickly as possible. Yes, the case for reform of social security benefits is overwhelming; yes, few people in Britain can be happy with the present system; and, yes, the present system is too complex to be understood by the majority of people. Overlapping benefits also baffle most hon. Members.
However, no one should be in any doubt that the Government's proposals have anything to do with trying to rectify or remedy those complexities. They are about saving money, in line with the Government's general policy, and doing so at the expense of the poor.
The Bill is an expression of the views of the most Rightwing elements within the Tory party. The main thrust of the Government's proposals is the antithesis of Beveridge's proposals and the major tenets of post-war social security legislation. It is right that Beveridge's assumptions were challenged, revised and adapted in legislation by successive Governments in line with the shift of the social patterns of the 1960s and 1970s. We should be doing the same in the 1980s. Life at the time of Beveridge was different from life today. Divorce was rare,


married women in employment were rare, and illegitimate births were not commonplace. It is not surprising, therefore, that in 1986 the Government should be looking at changes in social behaviour and patterns and adapting legislation accordingly.
The role of women in society has changed, there are more one-parent families and increased unemployment, but the Bill is almost antediluvian. It is not in line with those changes. The Bill's assumptions must be challenged. The prime function of social security legislation should not be the relief of poverty. At best, one could say that the Government may be trying to do that, but Opposition Members would argue that the proposals increase poverty. More should be done to prevent poverty and to provide an adequate level of income sufficient for a recipient to live a confident, self-respecting way of life.
Many aspects of the Bill spell bad news for millions of people. I shall focus on some of the concerns of my constituents. Recently, my local authority, Tameside council, carried out an extensive survey on how the many provisions of the Bill would affect the plight of many of my constituents. We have heard about the plight of old-age pensioners, single parents, and others. Hon. Members might not yet have referred to the plight of students, but I hope they will before the end of the debate.
The Tameside survey revealed the little short of catastrophic effect on many of the people living in my area. In view of the Government's overt support for home owners, is it not ironic that they are targeted for a special cut? They will lose £1·85 per week, which is paid as an addition to cover insurance and repairs. In Tameside about 5,800 owner-occupiers will be affected. Between 1984 and December 1985, 150 evictions among the same group took place because of mortgage foreclosure —300 per cent. up on the figures for the past three years. For a party that purports to be the party of the family, the Conservative party has an odd way of showing it.
Recently, the value of child benefit was cut by 5 per cent., which was a reduction of 35p a week per child, or £18·20 a year. My constituency has about 50,000 children, and the loss to the children and to Tameside's local economy will be about £900,000 a year.
The family credit scheme is hardly an adequate substitute. The Secretary of State has mentioned that two out of every five families who need extra support will not get it.
The problem in providing free school meals for low-income families is that, unless the family receive these meals because of their low income, only those who claim credit will receive any financial compensation. Only 22 per cent. of the parents in my constituency who claim free school meals—those not on supplementary benefit—receive family income supplement. Families with parents who are sick, disabled, widowed or divorced will lose out, as their income will be above the income support level. We know that Tameside and other councils are providing meals for these children. From 1988, my council and others will be forbidden to help.
The Secretary of State has said that proper help will be available from the social fund to help low-income families, but this help will have to be from a fixed budget, and at the discretion of the Department of Health and Social Security, with no right of appeal.
The Secretary of State did go a little way towards meeting our case today, and I hope to persuade him to set up a proper appeals machinery. The Tameside welfare

rights unit is extremely successful in appealing on behalf of my constituents against decisions of the DHSS. According to its last annual report, it had a 76 per cent. success rate on behalf of people living in Tameside.
What will happen to these people in the future? Without an appeal system, who will give the unit the £230 for removal costs that it got for one of its claimants, the £104·30 for clothing that it got for another, or the £538 owed by the DHSS to a claimant to have electricity reconnected? What about the sums in excess of £100 for furniture? Without the appeals system, the unit argues that these people will be left empty-handed.
If extra support is needed for families who are not in work, will the levels of the new income support scheme be sufficient to cover all the needs of women who have recently given birth, and their babies? This category is one of the groups to whom Tameside welfare rights unit frequently give advice. Sums secured from the DHSS average £150 per claimant. Will those people be given this help in future? Maternity grant of £75 is less than half what is needed. In a take-up campaign in my area to assist people to purchase bedding, 2,378 people received an average of £50 each—812 people in Hyde, one part of my constituency, alone.
The Secretary of State has argued that he intends to increase help for families with more than one disabled. child, and that special attention is being given to disabled people. I would ask him how one of my constituents will feel who has ill health. She has been treated for malnutrition, is not actually disabled, but needs extra heating and a special diet. The costs add up to £17·55 per week.
The family of a child with severe digestive problems receive £17·69 per week. They are not unusual in that the disability from which their daughter suffers means that they need extra heating, special diet and help with laundry because of incontinence and replacement clothes.
I could go on, but I should like to draw to the attention of the Minister some of the proposals in relation to housing benefit, because the situation there is no better. A constituent of mine, who lives in Welbeck road in Hyde, is 52 years of age and receiving supplementary benefit. She was signing on as unemployed and received £29·50 a week supplementary benefit. She has two working daughters, 19 and 18, who earn £32 and £30 a week respectively. The effects of the existing housing benefit cuts since November 1985 mean that these two daughters are now assumed to contribute £10·40 per week each towards housing costs. They are respectively £5 a week and £4 a week worse off than they would have been if they had given up their jobs and claimed benefit. That is what the Secretary of State says he is trying to prevent.
The Bill will make no difference to the poverty trap of my constituent and her two daughters. Indeed, it will make the situation worse. Her benefit will increase from £29·50 to £30·60, out of which she will have to pay water rates, and 20 per cent. of her domestic rates. I wrote to the Secretary of State on 27 November last year to outline the absurdities of the housing benefit scheme which this case reflects. An answer was received on 16 January this year to say that inquiries are taking longer than expected.
I believe this is not an isolated case. We must have an explanation, and fast, and I hope that the Minister, when he winds up this debate, will give us an assurance that these absurdities will be ironed out in the near future. I know that some of these constituency cases can be tedious,


but I make no apologies for bringing specific cases to the attention of the House, because we on this side of the House live in the real world, not in the fantasy world of the Secretary of State. Therefore, this is not something which I regret.
Clearly, the Bill targets when the next general election will take place—the autumn of 1987. No Government with any sense will go to the country after the effects of the Bill have been felt by the millions of people who are going to be made worse off as a result.
The Opposition must step up our campaign and ensure that every person affected by the Bill knows what will happen as soon as the Conservatives return to power—if they do. That is the size of our challenge. I am sure that my colleagues agree that we shall take up that challenge. We have to put across the message that we are going back to the days of the Poor Law and the soup kitchen, when malnutrition was rife and pawnshops were commonplace. It is a disgrace to a country which gave birth to the welfare state that we have to say those things. The best that can be said of the Bill is that it will see the death of this rotten and uncaring Government.

Mr. Martin M. Brandon-Bravo: I am grateful for the opportunity to express in broad outline my support for the Government's objectives in the Bill. The comments from both sides of the House show that we are all measuring and judging the Bill by three criteria—our sense of caring, our assessment of needs, and the inevitable yardstick of affordability.
We are spending £41 billion on this aspect of Government expenditure. Although that figure is always in the newspapers, we should continue to repeat it. It struck me as odd that the hon. Member for Oldham, West (Mr. Meacher) referred, effectively, to a sum of that magnitude as being likened to the cost of a Victorian poor law. The figure of £41 billion may trip off the tongue in this place, but it is in no way Victorian poor law provision.
If we are honest with ourselves, we know what we mean by "needs". All hon. Members are confronted in their constituencies not necessarily by needs but by expectations. All too often, one gets the uncomfortable feeling that people's expectations are in danger of destroying the very base from which those expectations can be delivered. The fairy story of the goose that laid the golden eggs has a moral which the House should not set aside too easily.
I do not think that a single hon. Member does not care. We are often confronted in our constituencies not so much by needs but by the philosophy, "I am entitled;" "I want;" "I must have." We want a system that allows all people —especially those who, for whatever reason, are not able to sustain themselves—to live with some dignity. We must take needs and affordability on board in making our judgment.
I welcome particularly the dual role that the Bill sets out — the role of the state, and the encouragement of personal pension provision. The Opposition have said that the Government have not changed a thing. I should have thought that the change in approach to SERPS was a major change made in the light of consultation. I am sorry that no member of the Social Democratic and Liberal mésalliance is present, because I do not know whether the

article that appeared in May last year in a national newspaper is correct. That article seems to say that the views of at least the leader of the Social Democrats are now very much in line with the revised proposals of my right hon. Friend the Secretary of State.
The right hon. Member for Plymouth, Devonport (Dr. Owen) argued that sex discrimination in our pension system should be abolished and that people should retire at 65. I am not sure whether the ladies would be happy with that. He also said that he would like to give people the option of retiring between 60 and 65. That seems to be in line with Government policy.
I am grateful for the portable personal pension scheme. I am on my third pension scheme—two of the pension schemes in which I was involved are frozen because I changed jobs. As this profession is precarious, I suppose that I have to take account of the possibility that I shall have to start a fourth pension scheme. Millions of people rely on company or personal pensions. Under the Bill, millions more people will have that dependence on such pensions. We should say loudly and clearly and as often as possible, "Heaven help those company pension funds and those personal pensions if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and the hon. Member for Oldham, West get their hands on people's pension funds for use in their lunatic Socialist schemes."
I do not think that even Ministers would think it amiss if I said that we still have a long way to go in simplifying housing benefit, but we are moving towards simplification. At least we have now taken on board that net income will be the basis of the income test and not gross income. That is a step in the right direction. I should like to express my thanks to Ministers for listening to representations—

Mr. Pendry: Is the hon. Gentleman special?

Mr. Brandon-Bravo: Of course I am special. I am more persuasive than the hon. Member for Stalybridge and Hyde (Mr. Pendry).
Under clause 28, district councils will be able to exempt war pensions from the exclusion that appears to be proposed in the Green Paper.

Mrs. Margaret Beckett: Will the hon. Gentleman give way?

Mr. Brandon-Bravo: In some case, there was genuine concern in my city that we would be taking £8 from war pensions. I am delighted that that has been put right.

Mrs. Beckett: I was seeking to save the hon. Gentleman from potential embarrassment. I do not know how closely he has looked at the Government's concessions. I understand that local councils can do what the hon. Gentleman suggests only within the overall housing benefit budget. Presumably this means that local councils will have to make changes or savings somewhere else. I have not had a chance to go into this matter as thoroughly as I should have liked, but I suggest, knowing the Government and their record, that the hon. Gentleman should look carefully at this concession before saying too much about how the Government have given it.

Mr. Brandon-Bravo: If the hon. Lady is correct and the concession is not as great as I have said, she may be assured that Conservative Members will press our senior colleagues strongly on that matter. War widows are the last group from whom we would want to take one penny.


Under the housing benefit heading, the Association of District Councils has made a number of comments. Out of the hoary old mechanism for funding more of this and more of that comes the mortgage interest tax relief, estimated at £3·5 million in 1984–85. While it might be of academic interest to compare mortgage interest tax relief with what we spend on housing benefit, I do not think we are comparing like with like. They seek to achieve different things. The hon. Member for Birkenhead (Mr. Field) may laugh, but they set out to achieve totally different objectives. I see no logic in saying that, because one has housing benefit, one should have mortgage interest relief, or vice versa.
If mortgage interest tax relief produces a property owning democracy, nobody in the House, except perhaps those on the lunatic fringe, would seek to dispute that home ownership has brought about, and is bringing about, much social stability that would otherwise not exist.
I will not go into great detail on the social fund. The hon. Member for Stalybridge and Hyde listed a number of single payment situations in his constituency. We have all been confronted with them. Some of the decisions of the Department of Health and Social Security offices are puzzling under the existing regulations and no doubt will be just as puzzling under the new.
Without being too precise on the figures, because I would not wish to embarrass the constituent whose experiences I am drawing on, I could not help but feel that there was something wrong with the existing system when I was confronted by somebody complaining that the DHSS proposed to award him only £X for the need that he expressed when he believed that he needed £2X. I, as would most of my colleagues, said that I would write to the DHSS and ask it to re-examine the case and produce a report. I have total admiration for the work of our local DHSS offices. The office wrote back and confirmed that my constitutent had not only been offered £X but that in the previous two years he had received £5X. That £5X was fast approaching £2,000.
That is the sort of anomaly which occurs under the present system. Therefore, 1 can understand that the Government, in seeking to have at least some control over what we spend, are taking on board the anomalies in the present system.
I am grateful for one phrase from the Minister which relates to the statement made this afternoon on the revisions of rates. I can understand why the Secretary of State for the Environment could not give the sort of answers that were sought because his was not the responsible Department. If the result of the examination of the cost of living and the indices on which uprating is considered is that elderly people, in particular, will have their 20 per cent. rebate of rates, or whatever it is, built into their old-age pensions, they have nothing to fear from the Bill.
I know that I speak for many of my hon. Friends when I say that, much as we want a review of social security and support the Bill, we are equally certain that in no way do we want the financial security of our senior citizens to diminish by one penny.

Mr. Frank Field: For the first time since 1979 it has been a pleasure to sit on the Opposition Benches over the past couple of weeks. We have witnessed an outbreak of warfare which is not usually seen on the

Government Benches. Sadly, however, there has now been an outbreak of that most deadly virus beloved by the Whips called loyalty. That loyalty leads to what is called a closing of ranks.
I thought it would be helpful to the Minister when he sums up if I put some of the objections to the Bill Which ordinary loyal Conservatives would have put if that outbreak of loyalty had not occurred.
As a Conservative Member I would have to begin by declaring self-interest. The self-interest would be that as each day passes the dreadful day of judgment, as the Prayer Book calls it, is approaching. In other words, the election gets ever nearer. [Interruption.] I wish the Opposition Front Bench would allow some of their hon. Friends to get on with their speeches. As that dreadful day of judgment approaches the electorate's mind is concentrated wonderfully on whether it will win under the scheme. I thought it would help the Government to concentrate their mind when they vote tonight if we look at the losses that will be experienced in marginal Conservative seats if the Bill goes through.
Looking at the Government's own figures, a little over 500 very elderly pensioner households will lose. Likewise, some 3,000 other pensioner households will lose if the Bill goes through unamended. In addition to the loss suffered by pensioners, about 1,500 other non-pensioner households in those constituencies will lose. In addition to that, if that list was not long enough, almost 500 working families who earn their poverty will be made worse off by the measure. If I could not rise to greater heights than that of self-interest I would be concerned that about 5,500 households in my marginal seat would be made worse by the move.
There are other objections to the Bill if one is of the Conservative persuasion. The second objection that Tory Members should be putting tonight is that the Bill makes a mockery of practically everything that the Government say about incentives. Every major statement from the Government Benches is a plea to build a society which encourages and rewards those who try to stand on their own two feet. What does the Bill do? Looking at the appendix we find a significant increase in the number of families who will face marginal tax rates in excess of 70 per cent. Although the Secretary of State is right in saying that technically the Bill solves the poverty trap problem and that most families would not be faced with a 100 per cent. tax rate, that solution is brought about by significantly increasing, in fact doubling, the number of those who face a marginal tax rate of more than 70 per cent. Given that we have had Tory Budgets which have said that that is a marginal tax rate that those at the top of the tree should not have to face, is it one that is tolerable for those at the bottom?
Thirdly, the Bill makes a mockery of Government statements that their policy is about targeting help on those in most need. It is significant that, despite the length of the Secretary of State's opening remarks, which almost ran to an hour, he did not say whether there will be more or fewer poor people as a result of the Bill. The existing resource, besides making a substantial saving for the Exchequer, will be shuffled around among the poor. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) drew on the Policy Studies Institute study, which highlighted how desperately placed unemployed


families were. If one had to opt for one group which was suffering the worst poverty, one would single out the unemployed. Yet they will lose most under the proposals.
The proposals also seek to deal with incentives to work for young workers. The premiums are being structured so that those under the age of 25 are penalised. Yet the households in greatest need are those with young families, and most young families have young parents. Indeed, among working class households family formation begins at a very early age. Those households in greatest need will lose under the measure, while other households composed of older non-pensioners will gain, although their needs will be less. That is hardly sensible targeting. If the Government were interested in targeting, they would put a greater premium on children. However, they dare not do that for the reasons that the hon. Member. for Kensington (Sir B. Rhys Williams) outlined. Given the Government's stand on slowly phasing out child benefit, they would land themselves in severe problems regarding incentives to work with income support payments to children way above child benefit levels. I am pleased that the hon. Gentleman has returned to the Chamber. I salute the noble way in which he presents the views and needs of his constituents.
The fourth reason why a loyal Tory Member should be worried is that the cornerstone of family policy until 1979, when the Conservatives won the election, was to build on child benefits. Yet they are now slowly phasing out that benefit. The Government's claim that they are shifting the tax burden from families with children to those without children, that is, reversing a trend that has gone on under both parties for 30 years, now has a hollow ring.
The fifth reason for voting against the Government relates to the provisions of family credit. Any sensible Tory Member knows that the Government's influence is limited and that they cannot pretend that they can arbitrate in marriages where there are severe difficulties. However, as it is possible to weight the outcome of the argument in those struggles in some families, we all know that too many of our female constituents get a rough deal from their husbands. In the past, therefore, Tory Governments have ensured that resources go to the woman rather than the man. As the hon. Member for Kensington said, we all understand why the Government are switching the additional support from FIS to family credit and from women to men. However, we do not accept that argument, and it will certainly not be accepted in our constituencies.
The sixth reason is that the measure concentrates even more power in the Minister's hands instead of decentralising it. My hon. Friend the Member for Oldham, West (Mr. Meacher) highlighted the extent to which this is an enabling Bill, giving the Minister extraordinarily wide powers to introduce regulations. That might be a sensible approach if the Government's track record on statutory instruments was good. However, on the board and lodging regulations, for example, a constituent of mine, Simon Cotton, has been taking the Government to practically every court in the country and beating them. That suggests that no sensible group of people would assign the power in this Bill to the Government.
A further reason why Conservative Members should be unhappy with the measure is the loss of appeal on single needs payments. Some hon. Members have already referred to the
Special Report by the Council on Tribunals,

in which the council states that it does not accept the Government's argument. It comes to the following conclusion:
The people most affected by this proposal are among the most vulnerable in our society. Very good reasons are needed before the abolition of the right to an independent appeal in such circumstances, an appeal which has existed for over 50 years. It would probably be the most substantial abolition of a right of appeal to an independent tribunal since the Council on Tribunals were set up by Parliament in 1958.
So much for a party that not only used to pay lip service to people's rights but ensured that those rights were enshrined in our courts and tribunal system.
If those were not powerful enough reasons why the measure should not command Conservative support, a further reason is that the measure further erodes the tax base. People will be bribed through the tax system to opt out and buy private pension provisions. A party which believes it is important to cut the rate of tax must know that every tax benefit concession makes it more difficult to deliver tax cuts because those tax cuts are being handed out in the form of tax privileges.
Those are the reasons why Conservative Members should vote against the measure. About 5,500 households in every marginal Conservative seat will be worse off, which means about 8,000 voters will lose money. The Bill makes nonsense of the Government's talk about incentives. The targeting of help on those in greatest need is irrational. It shows the poverty of the Government's commitment to build up the child benefit system, and so to shift the tax burden from those with children. It substantially alters power within the family, especially in families where there are difficulties between husband and wife, from the wife to the husband. It unnecessarily concentrates power in Whitehall and the Minister, instead of devolving it. It wipes away an appeal which has existed for about 50 years. Finally, it will make it even more difficult for the Government to deliver their promised tax cuts. Any one of those reasons is a good reason why Conservative Members should join us in the Lobby. All eight reasons should ensure that the Government are in severe difficulties.

Mr. Andrew Bowden: Few would deny the need for reforms in the social security system, and many would say that those changes should be radical. During the past 50 years there have been many changes. For example, pensioners have nearly doubled in number.
My first anxiety about the Bill is that, unless it is changed drastically and receives wide support, the changes will inevitably prevail for only a limited period. If we have learnt any lesson from social security legislation in the past 40 years, it must be that, when there has been no consensus or broad base of all-party agreement, a change of Government brings a change in legislation. That cannot be good for anybody. It cannot be good for the Secretary of State and his colleagues who wish to put the legislation on the statute book, for the industry or for the pensioners of tomorrow.
Much though I would like to, I will not spend any time on part I of the Bill because of the limitations of time. However, there are still so many gaps in part I that the Government must provide a great deal more information in Committee that they have in the Bill and in the Secretary


of State's speech. It is unlikely that I will be appointed to the Committee, but I will read the proceedings with great interest.
I should like to remind the House of the group that is most affected by changes in the social security system. Let us examine the basic facts of social security benefits as a percentage of income. For couples without children, that is 5 per cent.; for couples with children, it is 8 per cent.; for single people, it is 9 per cent.; and for one-parent families, it is 45 per cent. However, at the top of the table are pensioners, with 60 per cent. of their income comprising social security benefits.
I am deeply concerned about the effect that these proposals will have upon pensioners, particularly in relation to housing benefits and rates. In many areas, that is not as clear as the Green Paper and the White Paper implied.
There is broad agreement in the House that the rating system is unfair. It would therfore be utterly wrong to change a situation in which many pensioners get the equivalent of a 100 per cent. rate rebate until the rating system has been reformed. To take action before that would make it even worse for those pensioners who face rate bills and others who at the moment receive 100 per cent. rate rebates. I will not discuss water rates, but it is scandalous that there is not a rate rebate system for water rates as well.
Although I have not heard every speech tonight, I do not believe that any hon. Member has touched on the problems faced by owner-occupiers on relatively low incomes, with the state pension and a non-inflation-proof firm's pension. There is a significant number of such people. Since 1970, that non-inflation-proof firm's pension has been reduced in value in real terms by 80 per cent. For many in that section of the community, particularly when their non-inflation-proof firm's pension is small, housing benefit was some small compensation for the destruction of the value of their firm's pension and/or their savings.
The destruction of the value of that pension was in no way the responsibility of those people. They had retired. All hon. Members know who was mainly responsible for that; all political parties have some responsibility, but I submit that the Opposition have the greatest responsibility. Whoever brought that about and whatever the reasons for it, it is quite wrong that such people should now have their benefits withdrawn because when they first retired they could live on their income. They did not live like kings, but they had a reasonable income, for which they had worked and saved for so many years.
I warn the Government that they should not penalise that group unreasonably. These people worked hard and long for their retirement and were determined not to have to rely on state supplementary benefit or upon their families but wanted to stand on their own feet when they retired. They saw their real income undermined and destroyed. The Conservative party has time and time again said that that group should receive special help, consideration and assistance. It would be an unforgivable kick in the teeth for those people if a large part of all of their housing benefit was removed.
The carers for pensioners are another group which I should like to consider in the broadest sense. Those who care for the elderly and the disabled save the country and the Exchequer countless hundreds of millions of pounds a year. They need more understanding and help. They

should not have to wait until the end of the decade or rely on the careful in-depth inquiry in relation to the disabled and the operation of carers for pensioners. They need help now.
I am sure that all hon. Members are aware of cases like one I know. A lady in my constituency has given up her life to look after her mother. That lady has a full-time job and is a very capable person. She gets up extra early in the morning to ensure that she leaves her mother comfortable. She goes to work happily, she does not have too far to travel, and in her lunch hour returns to see if her mother needs anything urgently, to get her something to eat and do the essentials. She then returns to her place of work in the afternoon.
That lady's lunch is a sandwich on the bus coming from work to home in her lunch hour or on her return to work after seeing her mother. That person is absolutely dedicated, feels socially isolated and has made immense sacrifices year after year in carrying out those. responsibilities to her mother.

Ms. Jo Richardson: Will the hon. Gentleman give way?

Mr. Bowden: I should like to give way, but time does not permit.
I ask the Government to look at that group to see what additional help can be given to them. The basic needs of carers are greater than the needs of fit people of a similar age, and they should be given due consideration.
Like the hon. Member for Birkenhead (Mr. Field), I am concerned about sections of the Bill. However, although it might be against my better judgement, I will support the Government tonight. I must tell the Government Front Bench that they have a long way to go fully to convince me that the Bill will produce, as the Secretary of State said at Blackpool in 1985:
A system that is modern, clear and fair, one which answers real need wherever the need is to be found.

Mr. Dafydd Wigley: The misgivings of the hon. Member for Brighton, Kemptown (Mr. Bowden) are shared by Members from both sides of the House and I hope that the Government take note of them. Before addressing myself to the content of the Bill, I want to refer to its enabling nature. We have heard the Secretary of State refer to the number of regulations in other legislation that will be replaced by this Bill. He was quick to his feet on that point. He was obviously aware that he was vulnerable and had his defence already worked out.
There are far too many regulations here. I counted 24 references to facilitating regulations to be made in the Bill, giving rise to some 85 separate provisions. In addition, a number of orders and directions give enormous power to the Secretary of State. There is a real danger that regulations coming before the House will not receive adequate attention. The House must also bear in mind that it can accept or reject statutory instruments but not amend them. I hope that thought will be given to that when such legislation is forthcoming in the future.
I also hope that detailed notes on clauses will be given to the Committee so that we can understand them properly and that the Secretary of State will say how he will use the regulations in each context.
I think that we all agree that there is a need for legislation to revise, simplify and streamline social


security, but it should seek to make social security easier for the people and they should get it as an entitlement. The Bill does not do that. It aims at reducing the overall resources and it does not apply itself to the question from the viewpoint of welfare rights.
We in Wales are particularly worried because some of the groups who are shown to be losing in the context of the Bill are pensioners, those who are in work on low incomes without children and unemployed people, and we have a large proportion of those in Wales, perhaps larger than in the population as a whole. As a result, the Bill's impact will be that much worse in Wales.
Tonight I shall oppose the Bill because I have grave misgivings about most of it, but there are one or two points that I welcome and that I want to put on the record. For example, I welcome the first step towards providing portable personal pensions. That is long overdue; although one can argue about the way in which it is done and the details of it, at least we are moving in the right direction.
However, there is a real loss for many people as a result of other provisions, particularly the loss that pensioners will experience. In the 60-to-79 age group 57 per cent. of pensioners will face a net loss of benefit as a result of the Bill. In the 80-year-old and older group 43 per cent. will be worse off and only 33 per cent. better off. That should not be the objective or the effect of such a Bill and we should not pass a Bill that has such an effect.
The area that gives me greatest misgiving is the abolition of single payments and the social fund that is coming in its place. The changes in that area cause concern to many people. A survey of the effects in my county estimates that two thirds of those in receipt of supplementary benefit, unemployment benefit and supplementary pension will, on average, be some £7 a week worse off. Different hon. Members quote different figures, but this matter should be looked at in depth, office by office, in the DHSS to assess exactly what effect the change will have.
There is a real danger of payments being discretionary, and therefore varying from area to area. They will vary at the whim of the manager. That will put the managers of DHSS officials in a difficult position. They may be influenced by personal attitudes and it is not clear to the potential beneficiaries what is available and what they should be going for, where there is no question of entitlement. All those are matters about which we should be unhappy, particularly since there is no appeal procedure. Before 1980 the chairman of the Supplementary Benefits Commission described that situation as inequitable and arbitrary. Now, without an arbitrary procedure, the system is even more so.
If we are to rely on loans, there is a danger that we shall be causing even greater problems for many people. In Scotland, where payments under section 12 of the Act are more wide-ranging than under section 1 in England and Wales—I am thinking of children now—they have been moving away from loans to outright payments. This is for four reasons—first, there are administrative problems relating to loans; secondly, the therapeutic effect of loans applies only to a very few cases; thirdly, it is unrealistic to expect people on low incomes to repay loans; fourthly, it is not always helpful to replace one debt with another. We should take that Scottish experience very much to heart before we consider going down that road.
We must also be certain that local offices are not cash-limited in a way that will prevent people having their real needs properly met. I am particularly concerned about funeral and maternity expenses and the danger that people will feel that they have to plead poverty in order to obtain assistance. We should always bear in mind the dignity of those people who have to resort to those sources for assistance.
The sick, disabled and elderly in my constituency need considerable help towards their heating costs. The way in which the Bill changes those provisions will have a serious effect. The social fund payments will not reach many of these people. The changes will lead to real suffering and, I suspect, a greter level of debt and probably more disconnections among those client groups.
The position is bad enough in Wales. Many of the old industrial areas have a damp climate and the housing is totally inadequate. In other areas, the situation is worse. For example, in Scotland there is great concern about the cold climate allowance. I pay tribute to the work of the hon. Member for Dundee, East (Mr. Wilson) in that context. The present state of affairs is bad enough for those parts of the United Kingdom which have a cold climate, but it is particularly so in Scotland. Scotland is effectively discriminated against, but under the new system it will be even worse off.
The only possible source of extra heating allowance would be a cash-limited social fund, but it appears that even that may not even be intended for use in regard to the heating allowance. I hope that the Minister will be able to deal with that issue and clarify the position tonight. Thousands of people, mostly old, are dying from cold-related illnesses in Scotland every winter and, to a lesser extent, elsewhere. The position is unacceptable and the review does nothing to improve matters.
The hon. Member for Kemptown referred to those who care for elderly people and the disabled. The Government are aware of the general concern about the position of carers in our society from a number of reports and representations that have been made. The Bill does not consider their need in any special way. There is a danger of putting off consideration until the Government have looked at the overall survey of disablement needs. But the carers need consideration, not in the context of disabled people but in the context of their own needs and entitlements. That consideration should relate to income forgone. Whereas many can work with difficulty, many more give up jobs and make enormous sacrifices in order to look after somebody who is dear to them, and in doing so they save enormous funds for the state.
An enormous work load could be placed on social workers as a result of these changes. There could be additional work in explaining to people what their rights are, how to get their entitlements and how to sort out the system. I fear that this work load will be severe not only on the social workers but on the employees of the social security offices. It will be a tremendous burden and the work will be time-consuming. Social workers' time that could be spent on case work will be spent sorting out problems arising from these changes.
There is also the question of the availability of finance for the local social services departments to enable them to make up the losses that will come from this legislation —for example, the changes in section 1 payments for children.


The Bill will affect disabled people and those who are moderately disabled will lose out. The position of carers — many of whom are women — is unsatisfactory. Women are also affected by the change in maternity allowances and the payment of family credits to the husband's pay packet. There is also the unsatisfactory position of widows.
The effect of the Bill on children and young people is unacceptable. A moment ago we heard about school meals, and I touched upon family credit payments. Students are also feeling the squeeze more and more. I ask the Government to analyse section 1 payments to see what the exact effects of the change may be for children.
Most of all, the Bill affects people who depend on the state. We should be seeking a Bill of clarity, entitlement, simplicity, efficiency, speed and—most of all—fairness. This Bill is discretionary, unclear and unimaginative. At best, the Bill is a lost opportunity, at worst it is a severe blow to many people who cannot help themselves.

9 pm

Mr. Michael Stern: I welcome the Bill in general but, inevitably, given its size and complexity, I will concentrate my remarks on pensions. I welcome the part of the Bill dealing with pensions because it will achieve two necessary actions — it will bring some reality and some additional benefits into occupational pensions. The first thing it will achieve is what might be called the right to exit.
The House is aware that with the growth of occupational pension schemes, both in industry and in public service, there has also been a growth in the number of people who wanted to get out of those schemes but until now were unable to do so. I am sure I am not alone in speaking to teachers who, over the years, have grown more and more unhappy with the rigidities and apparent unfairness of their pension scheme. Until now they have had no alternative. Members of the disciplined services have—until the advent of the Bill—been under a lifelong threat that if a disciplinary hearing went the wrong way so too did their life's savings. Indeed, I have heard, within the corridors of this House, one or two Members who look forward to the right to opt out into an approved personal pension scheme because they have not accepted the generally promulgated myth that our pension scheme is the best of all worlds.
It is not only in the public services that the right to opt for an appropriate personal pension scheme is important. There have also been inappropriate old-fashioned pension schemes in the private sector. It was frequently a condition of employment in a company that an employee should, after a time, belong to the pension scheme. This happened in my own constituency in a substantial company where there are large numbers of employees who have witnessed the company discriminating unfairly in the funding of its own pension scheme as between one group of employees and another. Such people have been powerless to do anything until now. The new freedom that is promoted by the appropriate personal pension scheme is welcome.
I welcome the general provisions of the Bill concerning pensions because it has taken on board what no previous Government have taken on board—that SERPS was too big, was getting bigger and had to be cut down.
The word consensus has been mentioned several times today and it appears in the Liberal amendment. It implies agreement among all parties that taxpayers' money should

be spent in a certain way. I might be naturally suspicious, but when I hear that word in this context, I immediately ask myself, "Who is being ripped off'?" The people being ripped off in this case are future taxpayers and pensioners, part of whose livelihoods is being blithely promised away by people who will not be around when the bill arrives. I suggest that the word consensus should be replaced with the word conspiracy.
I mildly regret my right hon. Friend the Secretary of State's decision not to abolish SERPS. The arguments in the Green Paper were valid. He would have made a cleaner break with the past and put the funding of future state pensions much more beyond doubt if he had gone the whole hog. I am, nevertheless, delighted to accept the decision in the Bill. I warn him, however, that, if I am lucky enough to be selected as a member of the Standing Committee, there will be at least one hon. Member who will want to ensure that he has gone far enough to limit the cost of SERPS so that it can be afforded by future taxpayers and pensioners.
The Government Actuary's report shows that the costs of SERPS should be bearable. I congratulate my right hon. Friend on the honesty of his proposals regarding SERPS. He should not hesitate to consider the figures closely and he should be prepared to revise them if it is shown that the costs could still be too great.
Right hon. and hon. Members have said that the Bill consists largely of indications of draft regulations. As the Bill will be completed by the regulations, I suggest that it is difficult to read the Bill without having some idea of what will be in those regulations. I commend to my right hon. Friend the example set by the Occupational Pensions Board concerning emergency memorandum No. 48 of October 1977. The regulation was published within days of Royal Assent but only six months before the relevant legislation was due to come into force. We are considering legislation that will not be complete until the regulations have been published. Will my right hon. Friend consider at least publishing draft regulations even before Royal Assent so that we know what we are talking about?
There are lacunae in the Bill, especially regarding personal pensions. If they are not filled by the draft regulations, they could give a wholly false idea of what my right hon. Friend is trying to achieve. The Bill does not say, for example, that a member of an appropriate personal pension scheme will have a right to a death-in-service benefit. There is no indication in the Bill, although there is in the White Paper, that a member of an appropriate personal pension scheme will have a right to commutation. Nor is there any indication that he will have a right, as does the holder of a retirement annuity, to opt for a scheme that gives a five-year guarantee of payment of pension. There is no indication in the Bill of what investment powers trustees will have, or of who will be entitled to be trustees.
I encourage my right hon. Friend the Secretary of State to extend his thinking a little further on one or two aspects of the Bill. There has been some criticism this evening of the 2 per cent. rebate that has been offered for new contracting-out schemes. I applaud the principle. It benefits the public to give as much encouragement as possible to contracting-out schemes.
However, when it comes to pensions, thinking is often slow. Given that the full story will not be known until all the regulations are passed, insurance companies and other pension providers will have to look through all the new regulations and documentation. By the time many pension


providers are in a position to offer the appropriate scheme, much of the five-year period that has been suggested for the additional incentive will have been lost. As that period passes, the incentive will grow less, week by week. I hope that my right hon. Friend will be encouraged at least to take power to extend the five-year period to ensure that the incentive has the maximum effect.
Other points in the Bill will no doubt be commented on in detail, but there is one point on which my right hon. Friend could act now. It has been generally recognised that the annuity market, which the Bill requires to be opened up, must be much larger than the current market. By 1990, when the first annuities will need to be purchased or provided, the annuity market will have changed significantly. I hope that my right hon. Friend will introduce proposals to aid the expansion of the market into the new opportunities that the Bill promotes. At the very least I hope that my right hon. Friend will confirm as early as possible that his Department will co-operate with the studies that are taking place to ensure that the annuity market can be extended to the width that is required for the Bill to work.
I have spoken over my time limit on one part of the Bill, so I shall not comment on the attitude of the Opposition. Despite the criticism, the Bill could be, and I believe will be, a starting point for major reforms of pensions and other areas to increase personal freedom and create opportunities for ordinary people to improve their position. It will meet current needs better and it will enable more effective and faster response to the changes that are taking place in society to be made.

Ms. Jo Richardson: I have listened to practically every word of the debate, and it appears to me that almost all the speeches contained a critical note about the Bill. I underline the suggestion that the Government should take it back and reconsider it. Perhaps they should make a fundamental examination of our social security system in a proper way.
Despite the Government's continual claims, the review completely fails to address the dramatic and fundamental change in the position of women. Several hon. Members have mentioned the problems that women will face arising from the passage of the Bill.
Since Beveridge, there has been a dramatic and fundamental change in the position of women in society in general and in the family. The Bill is extremely difficult to read, and we shall have to grapple with a complicated and detailed package. It ignores the consistent pressure from women, women's organisations and the Equal Opportunities Commission for the radical and simultaneous reform of social security, pensions and taxation. We cannot consider one part without considering the others at the same time if we are intent upon eradicating discrimination.
The Bill will introduce practices and measures that will actively extend and reinforce inequality and disadvantage for women. The review has contemptuously ignored the developing EC law on equal treatment in social security, which is bound to lead to yet another spate of lengthy and costly legal battles and ignominious defeats for the Government in the European Court. The Government have deliberately obstructed all EOC and EC-supported

improvements for women. For example, they placed obstructions in the way of equal pay for work of equal value, which has made it difficult for women to claim; they refused to extend the invalid care allowance to married and cohabiting women; and they refused to adopt even the most minimal provision for parental leave and leave for family reasons.
The Bill hits women at two levels. First, it makes it more difficult for many women to get the support that they need to provide themselves and their children with a decent standard of living. Secondly, in some areas, it reinforces the dependency of women upon their partners —a concept which more and more women reject and which the Labour party will work to ensure is reversed.
I wish to point out some of the ways in which I and many women's organisations believe that women will be disadvantaged under the Bill. Much has been said tonight about pensions, which form a complicated part of the Bill. SERPS pays women a full pension five years earlier than men. Women who transfer to a personal pension or to a purchased occupational pension scheme will lose that advantage under the Bill. The pension payable at 60 could be one third lower than that payable at 65.
The Green Paper, which was produced so many months ago, said in paragraph 1.54:
The provision of annuities by insurance companies is normally on the basis of differential rates for men and women. But the Government do not believe that it would be acceptable to have women placed at a substantial disadvantage in terms of the pension they would receive for contributions paid at the same rate and up to the same age. The resulting funds must produce the same pensions. To achieve this will require insurance companies to provide annuities for this purpose on a common basis for both sexes … the Government recognise that it will be a major departure for the insurance companies and will wish to discuss the implications with them.
So far, so good.
However, the White Paper stated:
This was welcomed by the consumer bodies and the Equal Opportunities Commission, but received with reservations by insurance companies — The Government will therefore consult with insurers on the basis that annuities from the proceeds of contracted-out personal and occupational pensions should give all men and women at the same age the same annuity for the same amount of money.
It remains quite uncertain whether the insurance companies can be persuaded to offer annuities to women on the same terms as men.
The second point about SERPS is the abolition of the best 20 years formula. That will arouse indignation and dismay among women who welcomed that part of SERPS because it gave them the opportunity to work, to take breaks at home, and to take the best 20 years and have a pension.
My third brief point on SERPS is about survivors. A survivor, usually a widow, will no longer be able to inherit the whole of her spouse's pension but only half of it. The Government argue that the present rules are too generous, but they were introduced as a deliberate measure to improve the situation of widows. The need for such a measure will be all the greater if the opportunities for women, especially married women, to earn a decent personal pension are dramatically reduced by the Government's other proposals.
I hope that the questions I have raised about pensions will be answered honestly by the Minister, because many hundreds of thousands of women are looking anxiously at what the Government propose to provide for them in this Bill, and they will see the Bill and the provisions about


SERPS as being detrimental to their future. I have a number of other points, but I do not propose to go into all of them because I do not have time. They are about matters that specifically disadvantage women.
My hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) talked about the maternity grant. Some 72,000 women expect to receive maternity grants in 1985–86. In 1983 some 170,000 payments were made. Approximately 500,000 mothers who would have qualified for maternity grant will lose the £25 under the new proposals. Those who do not qualify for supplementary benefit, income support, family income support or family credit will lose the £25. Another 170,000 families on supplementary benefit will also lose an average of £13. There are massive gains and massive losses, but there are also tremendous differentials.
The Select Committee on Social Services, chaired by my hon. Friend the Member for Wolverhampton, North-East, has always recommended that the maternity grant should be based on entitlement. As I understand it, under this Bill the maternity grant will be paid from the social fund and will be discretionary. The Government have made much of the fact that the grant is £25 at the moment and will be increased to £75. That was mentioned at Question Time this afternoon. A grant of £75 is far too low, and will put us in fifth place in the seven EEC countries that pay such a grant. Luxembourg pays £630 and France pays £557. Parents magazine estimates that it costs £702 simply for baby clothes and equipment. The magazine also says that, according to its calculations, the average loss of the woman's salary is between £5,000 and £6,000.
The maternity grant should be paid as of right, should not be a discretionary payment from the social fund, and should be increased to at least £125. Even that is not sufficient to buy the baby items set out in the DHSS list. The DHSS calculated their cost at £160. That list is used by Department officials when deciding claims for single parents.
The payment of £75 will be less than some mothers receive at present. Those on supplementary benefit can get £85 in single payments, so the poorest and most vulnerable mother who currently can get £85, not through the maternity grant but through single payment benefits, will lose that and will get instead £75 if she goes to the social fund.
Many points could be raised, but no doubt we can deal with them in Committee. I am concerned that no provision is being made for mothers under 16 years. They do not qualify for supplementary benefit or for family income supplement and they will have no right to maternity grant. They also lose the right to free milk and vitamins. It is strange that the Conservative party, which professes to care about young people and families, should ignore so totally the needs and problems of mothers under 16.
The loss of free milk and vitamins, which will be abolished for those on income support, is a sore point. That benefit will be lost by 250,000 women and children. Babies born to poor families run twice as much risk of stillbirth or early death as those born to the professional classes. More than anyone else, the children in poor families need free milk and vitamins.
I could talk about many other things such as widows' allowances and pensions. I shall not do so but simply point out that the Bill is an absolute disaster for the overwhelming majority of vulnerable women. We shall

fight the Bill very hard on their behalf because they have no opportunity to come to the House and tell us of their experiences. We shall have to put those experiences before the Government and hope that they will listen carefully and will reconsider the Bill.

Mr. Bill Michie: I wish to express appreciation at being given time to speak, limited though it may be. I shall honour my promise to be brief because I did not expect to get in. I shall make briefly as many points as I can but obviously we can discuss the Bill more fully in Committee.
Despite the Government's claims, the Bill will not gibe more help to families. According to the White Paper, the key objective of the reform is to direct
more resources to areas of greatest need, notably low income families with children.
When we consider the illustrative figures in the White Paper, at first it seems that families will get an extra £5·90 per week on transfer from supplementary benefit to income support. But families will no longer get help though the other payments that are made at the moment. For instance, the average family in Sheffield gets a water rates payment of £1·20, a general rates payment of £1·50, a heating allowance of £2·20 and other payments of £3·20.That means that the average family in Sheffield will be £1·85 a week worse off.
I wanted to give the House many examples but I shall deal with just one which highlights what the Bill will do to people in need who trust politicians of all persuasions to pass legislation which helps rather than hinders them.
My Sheffield claimant is a female in her late fifties. She has been unemployed and dependent on state benefits for over 10 years. She lives on a large inner city estate which needs improvement and repair. Her income is at present £47 a week. This includes a number of "additional requirements" payments. She is a diabetic so gets an allowance of £3·70 a week. She has a higher heating addition of £5·40 a week. She suffers from bronchitis and has had half a lung removed because of cancer. She also needs extra heating because the house is hard to heat. Being in such poor health, she has contracted a skin complaint for which she needs at least one bath a day, two to be absolutely right. Unfortunately, the basic benefit allows for one bath per week.
It is pretty obvious from the Bill that this lady is likely to have her income reduced from £47 a week to £33 a week. That does not take into account the electricity bills which people like her will have to pay. These are genuine people: they are not fictitious; we are not producing them out of thin air. They are people to whom I have spoken and who have allowed me to use them as examples without giving their name. This lady's benefit will be reduced to £33 a week, without taking into account the cost of electricity at £150 per quarter.
The importance of benefits to the people of this country, and certainly to those in Sheffield, is unbelievable. The areas that I represent are inner city areas, where we have massive unemployment, problems of permanent unemployment for black school leavers and problems of bad housing. All these people will suffer more because of this Bill.
Although I have seven or eight pages of notes with me, I will, on instructions from my colleagues, come to a conclusion. I make this point—that if I cannot keep the


House I will keep the Committee. I shall lay stress time and again on all the clauses of the Bill and the anomalies and the injustice caused to ordinary people.

Mrs. Margaret Beckett: The Secretary of State said, initially at least, with pride—although he may be less proud about it these days—that the reviews and the Bill which comes from them were the most significant social security proposals since Beveridge. That at least Opposition Members echo. I will go further than the Secretary of State and say that the Bill represents the most significant statement of belief to emerge from the Conservative party in a generation, a statement which perhaps shows that the Conservative party or—in view of the remarks of some of the Secretary of State's hon. Friends tonight, I should be kind and say the Conservative Government—no longer believes in the welfare state.
The welfare state is founded on two basic tenets. It is meant to be for everyone. All contribute what they can when they can, so that when they are in need they can claim as of right. The Secretary of State is threatening the first fundamental tenet by his targeting, by defining the poor ever more harshly, tightly and rigidly, seeking to move further and further away from the idea that we all have a stake in the welfare state. In the social fund, as I shall show in a few moments, we see a major breach of the right to benefit that is the second basic tenet of the system.
On Second Reading we look not just at the broad sweep of the Bill's proposals but a little at its background. The background is quite simple and straightforward: the Government's desperate need to cut public expenditure, which has driven them now to measures that they would not perhaps have contemplated when they were first in power but which they now dare to propose. At a time when even the Confederation of British Industry says that the Government's priority should be to cut unemployment, and not taxation, the Secretary of State proposes to make further substantial reductions and structural changes in the social security budget. But if the Government were to take steps to cut unemployment that would in itself have a major effect in reducing the costs to which the Secretary of State so often refers.
The proposals in the Bill follow after, I suppose, rather than from the proposals in the reviews, because even the reviews themselves did not go far enough for the Secretary of State. There are the proposals to make everyone pay 20 per cent. of their rates, to attack people's entitlement to interest payments on their mortgages. These are the Secretary of State's own bright ideas. On pensions, in particular, the review body did not go as far as the Secretary of State wished, although he has sought consistently and skilfully to obscure the fact. He has heavily implied—never actually said—that the pensions proposals before the House stem from new facts which emerged in the course of the review, not known when the scheme was drawn up in 1975. It is perhaps a little unfortunate for the Secretary of State that those who serve on his reviews, and the Government Actuary, who all have their personal and professional reputations to consider, so speedily dissociated themselves from the proposals he put forward, if not in their name, certainly under the cover of their participation.
The Secretary of State tells us what a wonderful deal his personal pensions are although, when he issued the consultative document, everybody said what a rotten idea they were and how much worse they were than the state earnings-related pension scheme. If his personal pensions proposals are beneficial and provide such wonderful pensions, why is it that one of the few explicit parts of the Bill is that in which the Goverment make it plain that they will deem that somebody has a certain pension entitlement for a certain level of contributions, irrespective of whether the person is actually getting the money, and that they will base the topping up payments on deeming that that money is received? The Secretary of State must expect that some people at least will get less money than they expected for him to have bothered to write that into the Bill.
The Secretary of State keeps talking about people having a pension of their own as if a pension by any name is valued by some means other than the amount that it will buy. I have this vision—I think it must be the Secretary of State's vision—of some outraged pensioners of the future coming to his successor, claiming that they cannot afford to eat and being told, "At least your pension is your own". I do not think that it will go down very well. Anybody who takes out a personal pension will get substantially less value for money because the administrative cost of such schemes is about three times that of the state scheme and substantially more than that of good occupational pensions.
There are many unanswered questions about personal pensions, not least among them the question of how such a policy will be treated in assessing capital. If somebody is unfortunate enough to become unemployed, how will it be assessed and set against the benefit and what will happen to somebody who is taking out a personal pension but loses his job and may not be able to keep up the premiums? It seems to me that there is a serious risk that such a person, if forced to surrender the policy, may lose not only the advantage of earnings of those years in work, which will be lost in the SERPS scheme that the Secretary of State promises to modify, but also the possibility of having an extra pension entitlement because of the way in which that pension entitlement is to be secured.
As to the income support scheme, many hon. Members have drawn attention to its disadvantages. I must say a little more about the way in which the Government are treating the unemployed in the income support scheme. At a time when everybody agrees, even the Government, that the unemployed in justice should get the long-term rate of supplementary benefit as it is now, it is outrageous and indefensible to put forward in the Bill proposals that bring them not even to that rate, proposals which, when one includes the effect of the abolition of single payments, the intention to make people pay 20 per cent. of their rates and the proposals on mortgages, almost certainly mean that the Government, who claim that they cannot do anything to help the unemployed find work, are to reduce their standard of living even below what it is today.
My hon. Friend the Member for Oldham, West (Mr. Meacher) drew attention to the potentially enormous losses of the most severely disabled, in some cases up to as much a £50 a week in terms of standard of living, and for those newly disabled it will be in cash terms. In other parts of the Bill, as the Spastics Society has pointed out, it is the disabled who are likely to lose most from the abolition of reduced rate contributions. It is precisely they who are


likely to be trying to find work to enable them to have some independence and income of their own, although they are not able to sustain that work over long periods.
The proposals on family credit have been so effectively demolished by so many hon. Members, including the hon. Member for Kensington (Sir B. Rhys Williams), that it hardly needs me to dwell on them further.
The losses on houses benefit will be enormous. For many pensioner couples it will be something like £3 to £5 a week and for the young perhaps up to £12 a week when the combination of their benefits is calculated. The young, whether students or others, will be among the major sufferers from the Bill. One is almost driven to conclude that the Government are deliberately penalising the young when one considers the range of measures that strike at them. They and their parents must wonder in what type of dream world the Government live when they realise that 24 and 25-year-olds are expected to live at home and to be heavily dependent upon their parents. The Government seems to imagine that by forcing them into that position they are contributing to family solidarity.
The most iniquitous proposal, apart from that relating to the level of benefits for the unemployed, is the social fund. It is the worst proposal any Secretary of State has come up with for 50 years. When I listen to or read Ministers' words on that proposal, I can barely believe what they are saying, let alone imagine that they believe it.
On 22 January, the Secretary of State told the Select Committee that he was worried about the disabled, the network of additional requirements and the detailed and intrusive questioning through which people might have to go to prove that they were entitled to additional benefits. He believes that it will be better to do that through the mechanism of the social fund. How does he imagine that the social fund will work if it is not through detailed and intrusive questioning? That is what it is all about. It is hardly credible that the Secretary of State should defend his proposals upon the grounds on which they should be attacked.
The social fund will be a nightmare for the civil servants who have to try to administer it and a nightmare of desperation for claimants—all of proven need—who realise that staff in local offices will have to choose to whom they can make payments because they will not have the money to recompense them all. We are back to the days of charity and the denial of payment as of right.
It is all the more appalling that it is on the social fund that the rights of independent appeal are, in effect, completely to vanish. Many hon. Members have referred to the work of the Council on Tribunals. I was pleased to hear the Secretary of State say that he will reconsider the proposal. I do not know why he had to wait until tonight to say that because the council made it clear in its report that it has been pressing him to look at the proposal for weeks. We shall be pressing him on the point.
Parliament and the indpendent bodies that it has set up to scrutinise social security legislation will lose their powers under the Bill. There are at least 12 clauses—it has been claimed that there are 24 different areas—in which the Bill falls back on regulations which, as all hon. Members will be aware, come before the House for a decision but cannot be amended. They must be passed or rejected as a whole. The Government's track record on regulations is abysmal. Time and time again they have

closed their ears to warnings, even about the legality of regulations, and time and time again they have been proven to be wrong.
I fear that the Government are putting everything into regulation because they do not know how they will carry out the proposals contained in the Bill. The hon. Member for Macclesfield (Mr. Winterton) said that he had counted the number of times in the Select Committee that the Secretary of State said that the Government had not decided what to do about that or had not made up their mind what to do about the other. A major proposal, such as statutory maternity pay, which the Government told us would be included in the legislation, is not in the Bill. The Bill was only recently published and the Government are already adding new clauses because they did not have them drafted in time.
What is more, the Government have not finished tabling the regulations from last year's social security measure which was, in its way, comparatively minor. I am told that one of the most fundamental sets of regulations on disclosure of information will not be available until Easter. With such a track record, how can this House or another place put the powers that the Secretary of State seeks into the hands of so incompetent an Administration?
The hon. Member for Kensington, in a brave speech, said that the proposals would be put to the country in the general election. Wisely, he advised the Secretary of State to withdraw the Bill.
I warn the Secretary of State that the Opposition intend to take the campaign against the Bill into every constituency. Our aim is to force the Government, as he has been advised, to withdraw a Bill which clearly is not ready to be presented to the House. If he will not do that, we give him fair warning that his party and his Government will deserve to end up where it will end up —in the wilderness, for generations.

The Minister for Social Security (Mr. Tony Newton): This has been a constructive debate on social security. For most of the time, it has been conducted in a good natured way. I shall try to respond to the debate in a comparable way, picking up as many points as possible. I should like to touch briefly on some of the broader points raised by hon. Members.
I think that I speak for my right hon. Friend the Secretary of State in saying that nothing would please us more than to believe that it was possible to tackle on the basis of consensus the problems of the social security system. However, when confronted by an Opposition who appear to regard with equanimity the possibility of 27 per cent. combined national insurance contributions, and who wish apparently to have a national investment board of some kind to control and direct the activities of pension funds and to control forcibly some of those investments by repatriating some of them from abroad, significantly damaging the pension entitlements built up in those funds, I beg leave to doubt the room for consensus. If consensus is to be a description of a position in which those who will not face up to reality have a veto on tackling problems for ever, I do not think that any responsible party or Government could adopt that position.
My right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) will understand me when, against that background, I say that the suggested approach of a Royal Commission seems to suffer from some of the same


disadvantages. Unless it were able to produce results or was based on consensus, one would have the same problem of deferring action on difficult problems. Although there were not many matters on which I agreed with Sir Harold Wilson, I am inclined to think that there was some force in his comment about Royal Commissions taking minutes and wasting years.
Against the background of our social security problems, I think that there is a risk of our ending up after five years with a report that was out of date before it was even produced, and that no serious action could be taken until the middle of the next decade at the earliest. I do not believe that the problems are of a nature that permits that sort of delay.

Mr. Pym: That is only one possibility. There must be alternatives. To say that there is no way forward is possibly an error. We must find a way that will help create that broad sense of agreement which is a fundamental necessity from the point of view of our nation and for the recipients of the benefits we are trying to provide.

Mr. Newton: My right hon. Friend seems to be more optimistic than I am about the prospect of producing such a process confronted by the present Opposition Front Bench or, indeed, any Opposition that we are likely to have. However, may I say something which I hope he will feel responds in a different way to one of the themes of his speech for which I and my right hon. Friend have great sympathy — the reference to the desirability of tax benefit integration, or greater co-ordination, which has come up time and again in the debate.
Looking at the British tax system, which was the subject in which I took most interest during my first five years in the House, and the British social security system, with which I have sometimes been almost too closely involved as a Minister in this Department for nearly four years, I have concluded that, because of their present complexities, both systems will require significant simplification before it will be possible to move forward. My right hon. Friend the Chancellor of the Exchequer and his Conservative predecessors have already taken significant steps in simplifying some aspects of the tax system. I have no doubt that my right hon. Friend the Chancellor will put forward proposals carrying that process forward when he produces his Green Paper.
The proposals in the White Paper mark a massive step forward in simplifying the social security system in a form in which it would be far more realistic than at any time in the past generation to begin to think more constructively and positively about the type of integration people want. I can make no promises about the way in which that process will be carried forward. However, I believe that the Bill provides a better basis from which to move towards those objectives.
In one respect, the Bill marks a significant step towards closer co-ordination—the family credit proposals. The proposal is to pay through the pay packet in a way that will appear to the majority of beneficiaries as a direct offset to their tax and national insurance contributions. Those hon. Members who pay lip service —I do not include my right hon. Friend the Member for Cambridgeshire, South-East in this—to the idea of tax benefit integration and go on to denounce the family credit proposals because they involve payments through the pay packet appear to be

trying to have their cake and eat it in the biggest possible way. Perhaps those hon. Members mean more than lip service.

Mr. Favell: Has there been any progress towards persuading the Inland Revenue, rather than the hard-pressed Department of Health and Social Security, to administer the family credit system?

Mr. Newton: Further development in either department is not something on which I would wish to speculate in advance of any further publication by my right hon. Friend the Chancellor. We have had agreement on the proposal that my right hon. Friend the Secretary of State put forward in the White Paper. That is a helpful move in the right direction.

Mrs. Elaine Kellett-Bowman: Although women do not want just to have their cake and eat it, they feel strongly that family allowances should be paid to the woman. Often that is the only source of income for women in many levels of the social strata. Women will be hard hit if the family allowance is frozen and payments are made to the husband. I assure my hon. Friend that women feel strongly about this.

Mr. Newton: I understand my hon. Friend's point. I do not think that she was present during my brief exchange with my hon. Friend the Member for Kensington (Sir B. Rhys Williams) when I made it absolutely clear, as do the White Paper and the Green Paper before it, that child benefit will continue to be paid to the mother.
Another point that is relevant, although not conclusive, concerns family income supplement. About 40 per cent. of those benefiting from family income supplement—a significant proportion of those who will benefit from family credit—are single parents. The argument about whether the money is given in the pay packet or in any other way is irrelevant to the question of who gets the money. In practice, instead of having to collect payments from two different sources in an inconvenient way, many single parents—the majority are likely to be women—will receive payment through the pay packet in an undoubtedly more convenient and sensible way.
It is odd that there is such an astonishing fuss about the proposal to pay family credit through the pay packet on the ground that mothers are disadvantaged or their interests are not properly taken into account. I made this point the other day to the Select Committee on Social Services. So far as I am aware, at no stage in the history of social security has anyone come forward with a proposal to pay supplementary benefit scale rates for children to the mother instead of to the father, who is normally the claimant. In other words, we appear to be confronted with a proposition where what has been acceptable throughout the years in relation to child scale rates payable for children is unacceptable when applied to low-paid families in work. That is logical nonsense. [Interruption.] If I understood the sedentary intervention of the hon. Member for Oldham, West (Mr. Meacher), he said that the supplementary benefit payment goes to both parents. The fact is that one of them is the claimant and all the payments go to him or her. In most cases it will be the man. He receives the child scale rate for children as part of his total payment of benefit. I do not understand why what is appropriate for those who by definition are unemployed, and probably the poorest of all, becomes totally unacceptable concerning low-paid families in work.


The hon. Member for Oldham, West made many comments on pensions. I want to make one simple point. The Government's case is not that it is inconceivable that the present arrangements for SERPS could not be afforded on certain optimistic assumptions. Our proposition is that it is not responsible to make promises for a generation ahead when we cannot be certain that that generation will be able to fulfil them. That is not because of the burden we might be imposing on people who might not be able to sustain it, but because it is not right to make promises to pensioners about what they will be paid and risk not being able to pay it when the time comes. That is the point which the hon. Member for Oldham, West persistently refuses to face.
In the statistical contortions with which the hon. Gentleman sought to defend the responsibility of the present SERPS system he seemed to miss a point of which I hope he will take cognisance. His argument was that, on rather more optimistic assumptions in respect of, for example, real earnings growth than those contained in the Government Actuary's report, there would be no problem or that there would not be enough of a problem to worry about.
On the record of the previous Labour Government for real earnings growth, all the figures in the Government Actuary's report would be worse than those in it already. In other words, given the present Labour party policy and the previous Labour Government's record, we would have a bigger problem than the one we foresee. That is hardly surprising because the previous Labour Government were not even able to stick to the promises they made to existing pensioners, let alone those for future generations.
The hon. Member for Oldham, West was a member of the Government who fiddled the uprating changes in 1976–77 in a way that deprived pensioners of about £1 billion at current prices because they changed the basis of the uprating.

Mr. Meacher: Will the hon. Gentleman accept that what counts is the increased value of the pension over a six-year period? Over the six years of the Labour Government there was a 20 per cent. increase and over the past six years of Tory Government the increase has been about 3 or 4 per cent.

Mr. Newton: What also counts is whether the Government fulfil their commitments. The Labour Government manifestly did not fulfil the commitments they made to pensioners in 1976–77 and there is no basis on which the hon. Gentleman could pretend that they did.
I am afraid that I do not have time to answer all the points that have been made during the debate. The Opposition, throughout this review and in other discussions on social policy over the past four or five years, have persistently talked as if the welfare state had been established whole, entire and pure some 40 years ago and is to be preserved as some sort of ancient monument regardless of changes in society, changing needs and the purposes it seeks to meet. We are seeking to adapt it to meet modern needs, and that is what the Bill will help to achieve.

Question put, That the amendment be made:—

The House divided: Ayes 24, Noes 276.

Division No. 52]
[10.00 pm


AYES


Ashdown, Paddy
Bruce, Malcolm


Beith, A. J.
Campbell-Savours, Dale





Carlile, Alexander (Montg'y)
Meadowcroft, Michael


Clay, Robert
Owen, Rt Hon Dr David


Freud, Clement
Penhaligon, David


Hancock, Michael
Steel, Rt Hon David


Heffer, Eric S.
Stewart, Rt Hon D. (W Isles)


Howells, Geraint
Wigley, Dafydd


Hughes, Simon (Southwark)
Wilson, Gordon


Johnston, Sir Russell
Wrigglesworth, Ian


Kennedy, Charles



Kirkwood, Archy
Teller for the Ayes:


Livsey, Richard
Mr. John Cartwright and


Loyden, Edward
Mr. David Alton.




NOES


Adley, Robert
Couchman, James


Aitken, Jonathan
Cranborne, Viscount


Alexander, Richard
Currie, Mrs Edwina


Amery, Rt Hon Julian
Dickens, Geoffrey


Amess, David
Dorrell, Stephen


Ancram, Michael
Douglas-Hamilton, Lord J.


Arnold, Tom
Dover, Den


Ashby, David
du Cann, Rt Hon Sir Edward


Aspinwall, Jack
Dunn, Robert


Atkins, Rt Hon Sir H.
Emery, Sir Peter


Atkins, Robert (South Ribble)
Evennett, David


Baker, Nicholas (Dorset N)
Eyre, Sir Reginald


Baldry, Tony
Fairbairn, Nicholas


Banks, Robert (Harrogate)
Fallon, Michael


Batiste, Spencer
Farr, Sir John


Beaumont-Dark, Anthony
Favell, Anthony


Bellingham, Henry
Fenner, Mrs Peggy


Bendall, Vivian
Fletcher, Alexander


Benyon, William
Fookes, Miss Janet


Best, Keith
Forman, Nigel


Bevan, David Gilroy
Forsyth, Michael (Stirling)


Biffen, Rt Hon John
Forth, Eric


Blackburn, John
Fowler, Rt Hon Norman


Body, Sir Richard
Fox, Marcus


Bonsor, Sir Nicholas
Fraser, Peter (Angus East)


Boscawen, Hon Robert
Freeman, Roger


Bottomley, Peter
Fry, Peter


Bottomley, Mrs Virginia
Gale, Roger


Bowden, A. (Brighton K'to'n)
Galley, Roy


Bowden, Gerald (Dulwich)
Gardiner, George (Reigate)


Boyson, Dr Rhodes
Gardner, Sir Edward (Fylde)


Brandon-Bravo, Martin
Garel-Jones, Tristan


Bright, Graham
Glyn, Dr Alan


Brinton, Tim
Goodlad, Alastair


Brooke, Hon Peter
Gow, Ian


Brown, M. (Brigg &amp; Cl'thpes)
Gower, Sir Raymond


Browne, John
Greenway, Harry


Bruinvels, Peter
Gregory, Conal


Bryan, Sir Paul
Griffiths, Sir Eldon


Buchanan-Smith, Rt Hon A.
Griffiths, Peter (Portsm'th N)


Buck, Sir Antony
Grist, Ian


Budgen, Nick
Ground, Patrick


Bulmer, Esmond
Grylls, Michael


Burt, Alistair
Gummer, Rt Hon John S


Butcher, John
Hamilton, Hon A. (Epsom)


Butler, Rt Hon Sir Adam
Hamilton, Neil (Tatton)


Butterfill, John
Hampson, Dr Keith


Carlisle, John (Luton N)
Hanley, Jeremy


Carlisle, Kenneth (Lincoln)
Hannam, John


Carlisle, Michael
Hargreaves, Kenneth


Carttiss, Michael
Harris, David


Cash, William
Harvey, Robert


Chalker, Mrs Lynda
Haselhurst, Alan


Channon, Rt Hon Paul
Hawkins, C. (High Peak)


Chapman, Sydney
Hawksley, Warren


Chope, Christopher
Hayes, J.


Churchill, W. S.
Hayhoe, Rt Hon Barney


Clark, Hon A.(Plyn'th S'n)
Hayward, Robert


Clark, Dr Michael (Rochford)
Heathcoat-Amory, David


Clark, Sir W. (Croydon S)
Heddle, John


Clegg, Sir Walter
Henderson, Barry


Cockeram, Eric
Heseltine, Rt Hon Michael


Colvin, Michael
Hickmet, Richard


Coombs, Simon
Hicks, Robert


Cope, John
Higgins, Rt Hon Terence L.


Cormack, Patrick
Hind, Kenneth






Hirst, Michael
Moynihan, Hon C.


Hogg, Hon Douglas (Gr'th'm)
Mudd, David


Holland, Sir Philip (Gedling)
Neale, Gerrard


Holt, Richard
Nelson, Anthony


Hordern, Sir Peter
Neubert, Michael


Howard, Michael
Newton, Tony


Howarth, Alan (Stratf'd-on-A)
Nicholls, Patrick


Howarth, Gerald (Cannock)
Norris, Steven


Howell, Rt Hon D. (G'ldford)
Onslow, Cranley


Howell, Ralph (Norfolk, N)
Oppenheim, Phillip


Hubbard-Miles, Peter
Oppenheim, Rt Hon Mrs S.


Hunt, David (Wirral W)
Ottaway, Richard


Hunt, John (Ravensbourne)
Page, Richard (Herts SW)


Hunter, Andrew
Parris, Matthew


Hurd, Rt Hon Douglas
Patten, Christopher (Bath)


Irving, Charles
Patten, J.(Oxf W &amp; Abgdn)


Jackson, Robert
Pattie, Geoffrey


Jenkin, Rt Hon Patrick
Pawsey, James


Jones, Gwilym (Cardiff N)
Peacock, Mrs Elizabeth


Jones, Robert (Herts W)
Percival, Rt Hon Sir Ian


Jopling, Rt Hon Michael
Pollock, Alexander


Joseph, Rt Hon Sir Keith
Porter, Barry


Kellett-Bowman, Mrs Elaine
Portillo, Michael


Kershaw, Sir Anthony
Powell, William (Corby)


Key, Robert
Powley, John


King, Roger (B'ham N'field)
Prentice, Rt Hon Reg


Knight, Greg (Derby N)
Price, Sir David


Knowles, Michael
Proctor, K. Harvey


Knox, David
Pym, Rt Hon Francis


Lamont, Norman
Raffan, Keith


Lang, Ian
Rathbone, Tim


Latham, Michael
Renton, Tim


Lawler, Geoffrey
Rhodes James, Robert


Lee, John (Pendle)
Ridley, Rt Hon Nicholas


Leigh, Edward (Gainsbor'gh)
Ridsdale, Sir Julian


Lewis, Sir Kenneth (Stamf'd)
Rifkind, Rt Hon Malcolm


Lightbown, David
Rippon, Rt Hon Geoffrey


Lilley, Peter
Roe, Mrs Marion


Lloyd, Ian (Havant)
Sackville, Hon Thomas


Lloyd, Peter (Fareham)
Sainsbury, Hon Timothy


Lord, Michael
St. John-Stevas, Rt Hon N.


Lyell, Nicholas
Shaw, Giles (Pudsey)


McCurley, Mrs Anna
Silvester, Fred


Macfarlane, Neil
Skeet, Sir Trevor


MacKay, Andrew (Berkshire)
Soames, Hon Nicholas


MacKay, John (Argyll &amp; Bute)
Spence, John


Maclean, David John
Spicer, Michael (S Worcs)


McNair-Wilson, M. (N'bury)
Stern, Michael


McNair-Wilson, P. (New F'st)
Stevens, Lewis (Nuneaton)


McQuarrie, Albert
Taylor, John (Solihull)


Major, John
Taylor, Teddy (S'end E)


Malins, Humfrey
Terlezki, Stefan


Maples, John
Thompson, Donald (Calder V)


Marlow, Antony
Thompson, Patrick (N'ich N)


Marshall, Michael (Arundel)
Thorne, Neil (Ilford S)


Mates, Michael
Thurnham, Peter


Mather, Carol
Townsend, Cyril D. (B'heath)


Maude, Hon Francis
Tripper, David


Mawhinney, Dr Brian
Twinn, Dr Ian


Maxwell-Hyslop, Robin
Vaughan, Sir Gerard


Mayhew, Sir Patrick
Wakeham, Rt Hon John


Mellor, David
Walker, Bill (T'side N)


Merchant, Piers
Walker, Rt Hon P.(W'cester)


Meyer, Sir Anthony
Wardle, C.(Bexhill)


Miller, Hal (B'grove)
Watson, John


Mills, Iain (Meriden)
Watts, John


Miscampbell, Norman
Wheeler, John


Mitchell, David (Hants NW)
Whitfield, John


Moate, Roger
Wiggin, Jerry


Monro, Sir Hector
Wood, Timothy


Montgomery, Sir Fergus



Moore, Rt Hon John
Tellers for the Noes;


Morris, M. (N'hampton S)
Mr. Tony Durant and


Morrison, Hon C. (Devizes)
Mr. Mark Lennox-Boyd

Question accordingly negatived.

Main Question put forthwith, Pursuant to Standing Order No. 41(Amendment on Second or Third Reading):—

The House divided: Ayes 278, Noes 201.

Division No. 53]
[10.15 pm


AYES


Adley, Robert
Dykes, Hugh


Aitken, Jonathan
Emery, Sir Peter


Alexander, Richard
Evennett, David


Amery, Rt Hon Julian
Eyre, Sir Reginald


Amess, David
Fairbairn, Nicholas


Ancram, Michael
Fallon, Michael


Arnold, Tom
Farr, Sir John


Ashby, David
Favell, Anthony


Aspinwall, Jack
Fenner, Mrs Peggy


Atkins, Rt Hon Sir H.
Fletcher, Alexander


Atkins, Robert (South Ribble)
Fookes, Miss Janet


Baker, Nicholas (Dorset N)
Forman, Nigel


Baldry, Tony
Forsyth, Michael (Stirling)


Banks, Robert (Harrogate)
Forth, Eric


Batiste, Spencer
Fowler, Rt Hon Norman


Beaumont-Dark, Anthony
Fox, Marcus


Bellingham, Henry
Fraser, Peter (Angus East)


Bendall, Vivian
Freeman, Roger


Benyon, William
Fry, Peter


Best, Keith
Gale, Roger


Bevan, David Gilroy
Galley, Roy


Biffen, Rt Hon John
Gardiner, George (Reigate)


Blackburn, John
Gardner, Sir Edward (Fylde)


Body, Sir Richard
Garel-Jones, Tristan


Bonsor, Sir Nicholas
Glyn, Dr Alan


Boscawen, Hon Robert
Goodlad, Alastair


Bottomley, Peter
Gow, Ian


Bottomley, Mrs Virginia
Gower, Sir Raymond


Bowden, A. (Brighton K'to'n)
Greenway, Harry


Bowden, Gerald (Dulwich)
Gregory, Conal


Boyson, Dr Rhodes
Griffiths, Sir Eldon


Brandon-Bravo, Martin
Griffiths, Peter (Portsm'th N)


Bright, Graham
Grist, Ian


Brinton, Tim
Ground, Patrick


Brooke, Hon Peter
Grylls, Michael


Brown, M. (Brigg &amp; Cl'thpes)
Gummer, Rt Hon John S


Browne, John
Hamilton, Hon A. (Epsom)


Bruinvels, Peter
Hamilton, Neil (Tatton)


Bryan, Sir Paul
Hampson, Dr Keith


Buchanan-Smith, Rt Hon A.
Hanley, Jeremy


Buck, Sir Antony
Hannam, John


Budgen, Nick
Hargreaves, Kenneth


Bulmer, Esmond
Harris, David


Burt, Alistair
Harvey, Robert


Butcher, John
Haselhurst, Alan


Butler, Rt Hon Sir Adam
Hawkins, C. (High Peak)


Butterfill, John
Hawksley, Warren


Carlisle, John (Luton N)
Hayes, J.


Carlisle, Kenneth (Lincoln)
Hayhoe, Rt Hon Barney


Carlisle, Rt Hon M. (W'ton S)
Hayward, Robert


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Heddle, John


Chalker, Mrs Lynda
Henderson, Barry


Channon, Rt Hon Paul
Heseltine, Rt Hon Michael


Chapman, Sydney
Hickmet, Richard


Chope, Christopher
Hicks, Robert


Churchill, W. S.
Higgins, Rt Hon Terence L.


Clark, Hon A. (Plym'th S'n)
Hind, Kenneth


Clark, Dr Michael (Rochford)
Hirst, Michael


Clark, Sir W. (Croydon S)
Hogg, Hon Douglas (Gr'th'm)


Clegg, Sir Walter
Holland, Sir Philip (Gedling)


Cockeram, Eric
Holt, Richard


Colvin, Michael
Hordern, Sir Peter


Coombs, Simon
Howard, Michael


Cope, John
Howarth, Alan (Stratf'd-on-A)


Cormack, Patrick
Howarth, Gerald (Cannock)


Couchman, James
Howell, Rt Hon D. (G'ldford)


Cranborne, Viscount
Howell, Ralph (Norfolk, N)


Currie, Mrs Edwina
Hubbard-Miles, Peter


Dickens, Geoffrey
Hunt, David (Wirral W)


Dorrell, Stephen
Hunt, John (Ravensbourne)


Douglas-Hamilton, Lord J.
Hunter, Andrew


Dover, Den
Hurd, Rt Hon Douglas


du Cann, Rt Hon Sir Edward
Irving, Charles


Dunn, Robert
Jackson, Robert


Durant, Tony
Jenkin, Rt Hon Patrick






Jones, Gwilym (Cardiff N)
Oppenheim, Rt Hon Mrs S.


Jones, Robert (Herts W)
Ottaway, Richard


Jopling, Rt Hon Michael
Page, Richard (Herts SW)


Joseph, Rt Hon Sir Keith
Patten, Christopher (Bath)


Kellett-Bowman, Mrs Elaine
Patten, J.(Oxf W &amp; Abgdn)


Kershaw, Sir Anthony
Pattie, Geoffrey


Key, Robert
Pawsey, James


King, Roger (B'ham N'field)
Peacock, Mrs Elizabeth


Knight, Greg (Derby N)
Percival, Rt Hon Sir Ian


Knowles, Michael
Pollock, Alexander


Knox, David
Porter, Barry


Lamont, Norman
Portillo, Michael


Lang, Ian
Powell, William (Corby)


Latham, Michael
Powley, John


Lawler, Geoffrey
Prentice, Rt Hon Reg


Lee, John (Pendle)
Price, Sir David


Leigh, Edward (Gainsbor'gh)
Proctor, K. Harvey


Lewis, Sir Kenneth (Stamf'd)
Pym, Rt Hon Francis


Lightbown, David
Raffan, Keith


Lilley, Peter
Rathbone, Tim


Lloyd, Ian (Havant)
Renton, Tim


Lloyd, Peter (Fareham)
Rhodes James, Robert


Lord, Michael
Ridley, Rt Hon Nicholas


Lyell, Nicholas
Ridsdale, Sir Julian


McCurley, Mrs Anna
Rifkind, Rt Hon Malcolm


Macfarlane, Neil
Rippon, Rt Hon Geoffrey


MacKay, Andrew (Berkshire)
Roe, Mrs Marion


MacKay, John (Argyll &amp; Bute)
Sackville, Hon Thomas


Maclean, David John
Sainsbury, Hon Timothy


McNair-Wilson, M. (N'bury)
St. John-Stevas, Rt Hon N.


McNair-Wilson, P. (New F'st)
Shaw, Giles (Pudsey)


McQuarrie, Albert
Silvester, Fred


Major, John
Skeet, Sir Trevor


Malins, Humfrey
Soames, Hon Nicholas


Maples, John
Spence, John


Marlow, Antony
Spicer, Michael (S Worce)


Marshall, Michael (Arundel)
Stern, Michael


Mates, Michael
Stevens, Lewis (Nuneaton)


Mather, Carol
Taylor, John (Solihull)


Mawhinney, Dr Brian
Taylor, Teddy (S'end E)


Maxwell-Hyslop, Robin
Terlezki, Stefan


Mayhew, Sir Patrick
Thompson, Donald (Calder v)


Mellor, David
Thompson, Patrick (N'ich N)


Merchant, Piers
Thorne, Neil (Ilford S)


Meyer, Sir Anthony
Thurnham, Peter


Miller, Hal (B'grove)
Townsend, Cyril D.(B'heath)


Mills, Iain (Meriden)
Trippier, David


Miscampbell, Norman
Twinn, Dr Ian


Mitchell, David (Hants NW)
Vaughan, Sir Gerard


Moate, Roger
Viggers, Peter


Monro, Sir Hector
Wakeham, Rt Hon John


Montgomery, Sir Fergus
Walker, Bill (T'side)


Moore, Rt Hon John
Wardle, Rt Hon P. (W'cester)


Morris, M. (N'hampton S)
Wardle, C. (Bexhill)


Morrison, Hon C. (Devizes)
Watson, John


Moynihan, Hon C.
Watts, John


Mudd, David
Wheeler, John


Neale, Gerrard
Whitfield, John


Nelson, Anthony
Wiggin, Jerry


Neubert, Michael
Wood, Timothy


Newton, Tony



Nicholls, Patrick
Teller for the Ayes:


Norris, Steven
Mr. Mark Lennox-Boyd and


Onslow, Cranley
Mr. Francis Maude.


Oppenheim, Phillip





NOES


Adams, Allen (Paisley N)
Bell, Stuart


Alton, David
Bennett, A. (Dent'n &amp; Red'sh)


Archer, Rt Hon Peter
Bermingham, Gerald


Ashdown, Paddy
Bidwell, Sydney


Ashley, Rt Hon Jack
Blair, Anthony


Ashton, Joe
Boothroyd, Miss Betty


Atkinson, N. (Tottenham)
Boyes, Roland


Bagier, Gordon A. T.
Bray, Dr Jeremy


Banks, Tony (Newham NW)
Brown, Gordon (D'f'mline E)


Barnett, Guy
Brown, Hugh D.(Provan)


Barron, Kevin
Brown, N. (N'c'tle-u- Tyne E)


Beckett, Mrs Margaret
Brown, Ron (E'burgh, Leith)


Beith, A. J.
Bruce, Malcolm





Buchan, Norman
Kennedy, Charles


Caborn, Richard
Kilroy-Silk, Robert


Callaghan, Rt Hon J.
Kinnock, Rt Hon Neil


Callaghan, Jim (Heyw'd &amp; M)
Kirkwood, Archy


Campbell, Ian
Lambie, David


Campbell-Savours, Dale
Lamond, James


Canavan, Dennis
Leadbitter, Ted


Carlile, Alexander (Montg'y)
Leighton, Ronald


Cartwright, John
Lewis, Ron (Carlisle)


Clark, Dr David (S Shields)
Lewis, Terence (Worsley)


Clarke, Thomas
Litherland, Robert


Clay, Robert
Livsey, Richard


Clelland, David Gordon
Lloyd, Tony (Stretford)


Clwyd, Mrs Ann
Lofthouse, Geoffrey


Cocks, Rt Hon M. (Bristol S)
Loyden, Edward


Cohen, Harry
McCartney, Hugh


Concannon, Rt Hon J. D.
McDonald, Dr Oonagh


Conlan, Bernard
McKelvey, Williams


Cook, Frank (Stockton North)
MacKenzie, Rt Hon Gregor


Cook, Robin F. (Livingston)
McNamara, Kevin


Corbett, Robin
McTaggart, Robert


Corbyn, Jeremy
Madden, Max


Craigen, J. M.
Mallon, Seamus


Crowther, Stan
Marek, Dr John


Cunliffe, Lawrence
Marshall, David (Shettleston)


Cunningham, Dr John
Martin, Michael


Dalyell, Tam
Mason, Rt Hon Roy


Davies, Rt Hon Denzil (L'lli)
Maxton, John


Davies, Ronald (Caerphilly)
Maynard, Miss Joan


Davis, Terry (B'ham, H'ge H'l)
Meacher, Michael


Deakins, Eric
Meadowcroft, Michael


Dewar, Donald
Michie, William


Dixon, Donald
Mikardo, Ian


Dobson, Frank
Mitchell, Austin (G't Grimsby)


Dormand, Jack
Morris, Rt Hon A. (W'shawe)


Douglas, Dick
Nellist, David


Dubs, Alfred
Oakes, Rt Hon Gordon


Dunwoody, Hon Mrs G.
O'Brien, William


Eadie, Alex
O'Neill, Martin


Eastham, Ken
Orme, Rt Hon Stanley


Edwards, Bob (W'h'mpt'n SE)
Owen, Rt Hon David


Evans, John (St. Helens N)
Park, George


Ewing, Harry
Patchett, Terry


Fatchett, Derek
Pavitt, Laurie


Field, Frank (Birkenhead)
Pendry, Tom


Fields, T. (L'pool Broad Gn)
Penhaligon, David


Fisher, Mark
Pike, Peter


Flannery, Martin
Powell, Raymond (Ogmore)


Forrester, John
Prescott, John


Foster, Derek
Radice, Giles


Foulkes, George
Randall, Stuart


Fraser, J. (Norwood)
Redmond, Martin


Freud, Clement
Rees, Rt Hon M. (Leeds S)


George, Bruce
Richardson, Ms Jo


Gilbert, Rt Hon Dr John
Roberts, Ernest (Hackney N)


Godman, Dr Norman
Robertson, George


Golding, John
Robinson, G.(Coventry NW)


Gould, Bryan
Rogers, Allan


Gourlay, Harry
Rooker, J. W.


Hamilton, James (M'well N)
Ross, Ernest (Dundee W)


Hamilton, W. W. (Fife Central)
Rowlands, Ted


Hancock, Michael
Ryman, John


Harman, Ms Harriet
Sedgemore, Brian


Harrison, Rt Hon Walter
Sheerman, Barry


Hart, Rt Hon Dame Judith
Sheldon, Rt Hon R


Haynes, Frank
Shore, Rt Hon Peter


Heffer, Eric S.
Short. Ms Clare (Ladywood)


Hogg, N. (C'nauld &amp; Kilsyth)
Short, Mrs R.(W'hampt'n NE)


Holland, Stuart (Vauxhall)
Silkin, Rt Hon J.


Home Robertson, John
Skinner, Dennis


Howells, Geraint
Smith, C.(Isl'ton S &amp; F'bury)


Hughes, Dr Mark (Durham)
Smith, Rt Hon J.(M'ds E)


Hughes, Robert (Aberdeen N)
Snape, Peter


Hughes, Roy (Newport East)
Spearing, Nigel


Hughes, Simon (Southwark)
Steel, Rt Hon David


Hume, John
Stewart, Rt Hon D.(W Isles)


John, Brynmor
Stott, Roger


Johnston, Sir Russell
Strang, Gavin


Jones, Barry (Alyn &amp; Deeside)
Straw, Jack


Kaufman, Rt Hon Gerald
Thomas, Dr R. (Carmarthen)






Thompson, J. (Wansbeck)
Williams, Rt Hon A.


Thorne, Stan (Preston)
Wilson, Gordon


Tinn, James
Winnick, David


Torney, Tom
Wrigglesworth, Ian


Wardell, Gareth (Gower)
Young, David (Bolton SE)


Wareing, Robert



Weetch, Ken
Tellers for the Noes:


Welsh, Michael
Mr. Sean Hughes and


White, James
Mr. Allen McKay.


Wigley, Dafydd

Question accordingly agreed to.

Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

Orders of the Day — Social Security Bill [Money]

Queen's Recommendation having been signified—

Motion made, and Question proposed,
That, for the purposes of any Act resulting from the Social Security Bill, it is expedient to authorise the following—

(1) the payment out of money provided by Parliament of—
(a) any sums payable by way of the following—

(1) income support;
(ii) family credit;
(iii) rate rebate subsidy;
(iv) rent rebate subsidy:
(v) rent allowance subsidy;

(b) payments by the Secretary of State into the social fund;
(c) any sum payable under the Act to a person whose entitlement to the sum depends on his being entitled or treated as entitled to a qualifying benefit payable out of money provided by Parliament;
(d) payments by way of adjustment;
(e) any sums falling to be paid by the Secretary of State under or by virtue of the Act by way of travelling expenses;
(f)any other expenses of the Secretary of State attributable to the Act; and
(g) any expenses of the Lord Chancellor attributable to the Act: and
(h) any increase attributable to the Act in the sums payable out of money provided by Parliament under any other Act;

(2) the charging on and payment out of the Consolidate Fund of any increase attributable to the Act in the sums to be charged on and paid out of that Fund under any other Act;

(3) the making of payments into the Consolidated Fund; and in this Resolution—

(a) 'Act', when not used in relation to any Act resulting from the Social Security Bill. includes an Act of the Parliament of Northern Ireland; and
(b)other expressions shall be construed in accordance with any Act resulting from the Social Security Bill. —[Mr. Newton.]

Mr. Charles Kennedy: I hope that the House will not pass the money resolution. During the Second Reading debate, several hon. Members expressed great anxiety about the provisions of the Social Security Bill. The alliance, other Opposition Members and, it would seem, some Conservative Members, have expressed great anxiety about the Bill. We would not be happy to pass the money resolution.
As my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) pointed out earlier, we were sceptical from the outset, as were many hon. Members, about the introduction of a Bill with the stipulation of nil revenue implications. Now that we see how the Government propose to implement that stipulation and straitjacketing, our concern is justified. The lack of figures, the lack of clarification and the unwillingness of the Government to provide suitable clarification and explanatory figures of what is envisaged makes it impossible for the Bill to be properly scrutinised. What is available and open to analysis gives rise to great anxiety. We have already said that the reform of pensions policy cannot command broad support because of the simple fact —dwelt on by the Minister at some length in his speech —that the Government are again in danger of making pensions provision a party political football.
I am sorry that the Minister and the Secretary of State did not pay more heed to the right hon. Member for Cambridgeshire, South-East (Mr. Pym) when he spoke with great authority about the need for consensus in these matters. Consensus is not, as the Minister and his hon.


Friend the Member for Bristol, North-West (Mr. Stern) tried to make out, a dirty term. Consensus does not imply that the major problems will be avoided or removed. We do not suggest that for one moment. On the contrary, in a crucial area such as pensions, which will stretch into the next century, we need a little less party political posturing from all quarters and more agreement in the name of the common good.
The alliance have been the only parties to stress that during the debate this year. It is sad that the Government have not seen fit to enter into such a constructive discussion, which could have led to a much securer basis for legislation than the one they have now. As my hon. Friend the Member for Roxburgh and Berwickshire made clear, we regret the fact that the savings which the Government will make through their proposed restructuring of the state earnings-related pension scheme will not be used, at least in part, to increase the basic pension. There can be no doubt, despite the protestations of the Minister, from our constituency surgeries that, under the Government's economic policies, pensioners have a great deal to complain about and suffer a great deal of hardship. It is sad that the Government will not give more attention to their position.
The cuts in housing benefit which the Government are marking out in their review of social security, and especially the extraordinary provision that there should be a contribution of 20 per cent. towards rates bills, are discriminatory and unjust. It is astonishing to remember that, earlier today, the Secretary of State for the Environment made a statement on rating reform and quoted as one of the three fundamental weaknesses in the present arrangements,
the unfair burden on householders of domestic rates.
He went on at some length in the rest of the statement and in answer to questions to speak about the anomalies and the injustices. If the Government believe the rating system to be so unsatisfactory and unfair, why do they now, in what is supposed to be a far-reaching and long-term review of social security, draw into the rating net many of those least able to contribute towards those rates? That makes nonsense of the argument in favour of simplification and fairness which the Government have laboured.
The alliance cannot support the cash-limited social fund, for which approval is sought in this money resolution. The Secretary of State was extremely vague in his opening speech this afternoon when questioned on this matter. He seems anxious to ignore the evidence contained in the special report of the Council on Tribunals. It is worth reading into the record what that council said about the proposal:
The Council on Tribunals believe this proposal to be misconceived. It would abolish a right of independent appeal which has existed for over 50 years.
If the Government are intent on having some local accountability in the decision-making process for the grants and loans made under the social fund, it is incumbent on the Secretary of State to come clean with the House as to what he has in mind. It was evident from his statement that he is willing to have a system that pays lip service to the idea of an appeal against an unfair or unjust decision, but that he will not have something which affords the claimant—who until now has operated on the basis of a right to appeal, as much as a right to claim benefit —the right to an appeal which has been enshrined in

law for many years, as the report made clear, and that he is unwilling to consider an effective alternative appeal mechanism.
There must be a greater move towards integration of the tax and benefits system. The Secretary of State said that the present take-up of FIS was about 50 per cent. and hoped that the equivalent system under the new scheme would have a take-up of 60 per cent. how can he be confident that that rate of take-up will be achieved? Further integration of tax and benefits would be the most effective way to increase the level of take-up in the whale benefits system. For that reason, and to achieve simplicity and fairness, the alliance supports that integration.
For those reasons, we cannot support the money resolution. We believe that its defeat would add support to our demand for a reform of the social security system, which at present is unjust and ill-conceived and will not carry the all-party support that is essential, as hon. Members in all parts of the House pointed out in the earlier debate.

Mr. Jim Lester: Considering the Government majority in the last Division, it is wishful thinking on the part of alliance Members to imagine that the money resolution will not be approved. Although I did not support the measure on Second Reading, I urge hon. members to support the money resolution.
When opening the debate, the Secretary of State said that, when replying, the Minister of State would deal with the issue of income support. I appreciate that, because the House was anxious that as many hon. Members as possible should take part, the Minister did not have time to deal with that issue.
While defending the family credit scheme and the supplementary benefit arrangements, the Minister said, in a sensitive and understanding way, that child credit went to the poorest of the unemployed. I was interested to hear his remarks on that subject because I am deeply concerned about the impact that the Bill will have on the unemployed and, in particular, on the long-term unemployed.
This issue has been raised by my hon. Friends and I consistently—through well-supported early-day motions and in the evidence that we gave to my right hon. Friend's review —and I remain disappointed about the way in which the long-term unemployed will be treated. There is no doubt that those who have been without work for a long time require additional benefit. Indeed, the Government recognised that when they allocated long-term supplementary benefit to the over-60s in return for the declaration that they were no longer seeking employment. The Government and Opposition have for long agreed the principle of paying supplementary benefit to the long-term unemployed; it has simply been a question of when the cash should be provided.
For the families of the unemployed, the premium system is likely to be of greater benefit than the present system. But as about 15 per cent. of families come within the ambit of the long-term unemployed, about 85 per cent. of families will be substantially worse off unless a premium is introduced that recognises that when someone has been out of work for 12 months or longer, additional support should be provided.
I hope that my right hon. Friend will examine the position as it affects those people, otherwise during the next election campaign, when I expect unemployment to


be higher rather than lower, the public will raise that as a major issue with hon. Members, particularly Conservative Members.
b
If no special premium is intended or no one is seeking a special premium, one needs to look at the alternative. The alternative put forward by my right hon. Friend is the social fund. I am worried about the way the social fund is likely to operate for the long-term unemployed. One can imagine not only a variation in attitude from place to place where problems may be different, say from south Wales to the south-east of England, but a variation from one individual to another. It is difficult for any social security officer to make a judgment on the social requirement of a long-term unemployed person, particularly when the intention of the social fund is to replace grants by loans repayable out of a claimant's weekly benefit.
If that is the way in which the social fund is to operate, not only will we disadvantage the long-term unemployed by offering no premium, but we will also squeeze their weekly rate by the repayment of grants for the necessary things that a person needs for himself and his family when he has been unemployed for more than a year. In addition, the proposal to charge 20 per cent. rates adds still further to the squeeze on an already limited income. None of us who have taken any interest in this subject have any doubt that the unemployed are the poorest of all. I have a file of considerable dimensions full of letters from people who have written to me from all over the country telling me how difficult is their situation.
One of the things that one might have welcomed is the earnings rule, because it would make the money resolution less onerous if people were able to earn a certain amount while unemployed. The Bill proposes a certain relaxation of the earnings rule in that anyone who has been unemployed for two years is able to disregard £15 of what he earns. As the normal definition of long-term unemployment is to be out of work for a year, it seems odd that one has to be out of work for two years before one is allowed to earn £15 to help pay for the vital needs of oneself and one's family. I hope that my hon. Friend will look at that and bring it into line.
The combination of these things also includes the impact of SERPS on someone who suffers from unemployment, because the abolition of the 20 best years rule will hit anyone who is unemployed for a long time and for whom there is no alternative form of protection against a broken work record. No alternative protection is proposed.
I am teasing out from the Bill its overall impact on the long-term unemployed. One must highlight the plight of those people and that is why I speak on this money resolution. I hope my hon. Friend will consider in stage, and certainly on Report, the points I have made. Without that consideration, for a lot of other reasons that other hon. Members have talked about, this Bill will not be seen as a major reform, but as a way in which we have damaged and been less than fair to those less fortunate people in our society.

Mr. Andrew F. Bennett: I make no apology for detaining the House, because if the Government had not chosen to make a statement before the Second Reading debate, I suspect that all hon. Members

who wanted to speak on the money resolution could have spoken on the second Reading. It seems odd that a Government who are so proud of their reform proposals for social security, only a few months ago felt it necessary to upstage this debate by making their announcement on the rates. I suspect that the Government are already beginning to realise that the less that is said publicly about the Bill the better.
I have three main points to make. The first is a general one, in that it seems that the only reason for the Government bringing this measure forward is that they have a totally pessimistic view of our future economy.
If the Government were investing in the needs of the country, we should not have to question whether we could afford to pay for SERPS. Clearly we should be able to pay for it. If the Government were doing anything to create jobs and get people back to work, the amount that had to be paid out in benefits would be considerably reduced and there would be sufficient money to pay decent benefits to those in need of them. It is a measure of the Government's lack of confidence in themselves that they have felt it necessary to bring the measure forward.
My main objection to the money resolution centres on the way in which the Bill further extends the Government's powers to do things by regulation and denies the House the opportunity to scrutinise most of the measures. There is hardly a page in the Bill on which there are not powers to make regulations. For example, in clause 41(1), paragraphs (a) to (u) set out over two pages the regulations which may be made.
When I intervened earlier, the Minister claimed that there would be fewer regulations because of the Bill. That may be so, but they will tend to have wider powers, so there will be longer individual sets of regulations, which means that the House will have even less time to scrutinise them in the normal one and a half hours.
The worst problem with regulations is that we do not get an opportunity to move amendments. The Department has great difficulty in presenting regulations accurately. I do not blame the officials, because they have to produce a tremendous number of them, but they get about one a week wrong. Sometimes the mistakes are found by the courts, sometimes by the Joint Committee on Statutory Instruments and just occasionally by the officials themselves.
Some people assume that the Department gets regulations wrong just in wildly publicised cases, but I shall give just one example from today's proceedings of the Joint Committee on Statutory Instruments about which the Department wrote:
It is conceded that there is no authority to delegate the power of determination to the scheme managers and trustees, and the Department proposes therefore to make an amending regulation".
That is the pattern that we get fairly consistently from the Department.
The House should consider the way in which it scrutinises tax and social security measures. I can see no logic in the fact that we have developed two differing sets of procedures. For taxation measures we have the Budget and the Finance Bill once a year, so hon. Members have a very good opportunity on the Floor of the House and in Committee to scrutinise the legislation, to put down amendments and to force the Government to justify each clause and, if necessary, each subsection.


For social security measures, instead of having one Bill each year, with an opportunity to table amendments, we are presented with many regulations which we cannot amend. Ministers are given amazing powers. Any Minister who has been in the DHSS, not just under this Government but under the Labour Government, may have thought when he wanted to do something that he would have to get into the legislative queue. I suspect that Ministers have been amazed when told by civil servants that, if certain powers are used in a different way, they can do what they want. So Ministers have got into the habit of using powers under regulations to do things that people never expected them to do.
If the Government want to integrate the social security system and the tax system, the first thing they should do is to examine the procedures of the House and bring social security legislation into line with tax proposals, so making sure that the House has an opportunity to amend each proposal, rather than putting them into a continuing series of regulations.

The Minister for Social Security (Mr. Anthony Newton): I am grateful to the hon. Gentleman for giving way. I say this with some diffidence, since my hon. Friend the Financial Secretary to the Treasury has come in. I wonder what comment the hon. Gentleman has to make about the extent to which the Revenue operates under things that never come before Parliament at all -namely, an extensive range of extra-statutory concessions.

Mr. Bennett: I accept the argument about extra-statutory concessions, but I suggest that they go nothing like as far as the regulating powers that the Government make. It is perhaps a little worrying that the Minister has apparently now learnt from the lessons of extra-statutory regulations, because he talks in the measure of directives. Again, I am sure that the Committee will want to spend a lot of time scrutinising how the directives mentioned in the Bill are to he subjected to parliamentary approval. It may well be that Ministers would like to get away from parliamentary scrutiny, but I believe very strongly that the House ought to be pressing hard for full scrutiny of all these proposals, that Ministers should not be allowed to put more and more into regulations and prevent debate.
This money resolution affects students, particularly in the way in which the Government have, I believe, cheated students. This time last year, there were to be two reviews —the social security review and the review of student financial support. Eventually the government announced that they wanted to remove students from the social security system. Instead of announcing the results of their student grants inquiry and suggesting that they would make good the money that students would lose by cuts in social security, the Government simply abandoned the review of student financial support.
So the students have found that their income from social security is being taken away, without there being a proper review of student grants. We know that, in the short term, they will lose the right to claim housing benefit during the short vacations and for halls of residence during term time. That will be a considerable loss to many students, faced already with the possibility that their grants will rise by only 2 per cent. and with a real-term loss of grant of about 20 per cent. since 1979. In the short term therefore, students will suffer real and considerable hardship.
In addition, proposed in the Bill and left out of the money resolution is the long-term question of money for

students. The Government have made it clear that they want to take students out of the social security system, a laudable proposal, in my view, provided that the Government come up with adequate finance to replace the money that students will lose. But the Government have produced no explanation of where the money will come from and, in particular, have not addressed themselves to the problem that housing costs vary widely across the country.
I suggest that Government ought immediately to reinstitute their inquiry into student financial support. Only when they bring those proposals forward will they be justified in starting to take student finance out of social security. Until they do so, there will be great bitterness among students. It is quite clear that very many students already suffer considerable worry and anxiety during term time about their financial position. We have the absurd situation of students taking jobs in the local community, to the detriment of their studies, and forcing others to claim benefits. Many students are in conflict with their parents over finance, yet if their proposals go through, the Government expect students to be supported by their parents. I hope that the Minister will give a clear directive to social services departments for those students who have been in care, to make certain that the local authority puts up extra money.
Until the Government can bring forward adequate alternatives for students, they should take these proposals away and keep students within the social security system. Until the Government can face up to giving the House adequate powers of scrutiny over social security regulations, again they should take the Bill away. Lastly, the Bill should be taken away because I am sure that a decent Government could run this country effectively enough to give us all decent pensions and decent benefits.

Sir Brandon Rhys Williams: I oppose this money resolution because it constitutes yet another nail in the coffin of the national insurance fund. The national insurance fund is not actually mentioned any where in it; but it ought to be at the core of it.
I said on Second Reading that the Government are still paying lip service to the contributory principle, but their adherence to it is not based on logic or on any recognisable financial maxim, and it does not carry them even as far as the money resolution on this major Bill. That is a significant error, and it is the reason why the House should reject the resolution.
Of course, the national insurance fund at the outset was not financially sound. While it was based on flat-rate individual contributions, it had also to rely on a subsidy from the Consolidated Fund; and even then it could not meet its outgoings. But we found the solution to that problem some 10 years or more ago when we put contributions to national insurance on an earnings-related basis. That provided the solution, but it has not been followed up.
The national insurance fund could and should be the source of finance for all the benefits listed in the resolution, including the social fund, drawing its resources from a tax at a flat rate not on every worker but on every pound of income. Such a tax would be in fact a personal contribution, resting directly on personal capacity to pay.
If social benefits were financed in that way, it would constitute a growing-up of the whole conception of


national insurance based on the contributory principle as a separate self-balancing system independent of the Consolidated Fund. We would not be treating the Consolidated Fund as we do now, and are doing in this resolution, as a glorious bran tub out of which benefits can be pulled simply by the application of political pressure. We would instead be able to bring the interests of contributors and the requirements of beneficiaries to a state of equilibrium based on the principle of,
From each according to his capacity, to each according to his need.
There is nothing wrong in that slogan as the basis of a closed self-balancing contributory system soundly financed.
The Government in this Bill and in this resolution are missing an opportunity because they have not given sufficient study to the principles underlying the redistribution of income in a democratic society.
I hope that the House will reject the resolution.

Mr. Jeremy Corbyn: I, too, strongly oppose the money resolution which, indeed, of necessity is vague and, in the case of the Bill, well might it be so. The one feature throughout the debate on the Government plan for social security has been their inability accurately to predict how much it will cost or, more properly, how much it will cost claimants throughout the country for the social security legislation to be introduced. The most accurate prediction I have heard is that £700 million will be taken out of the pockets of the poorest people. For the Secretary of State to claim, as he has on numerous occasions, although not so much today, that the country cannot afford a decent social security system any more than it can afford a decent pensions system is arrant nonsense.
What we need is a determination to eliminate poverty. That is what the debate ought to be about, not a systematic attack on the welfare state, which is what the Bill and the money resolution represent.
The Policy Studies Institute produced an analysis of the Government's plan entitled "Selective Social Security" in which it quoted from a DHSS-sponsored survey in 1982 on the indicators of hardship by type of family. Taking first couples with children, the money of 56 per cent. of claimants ran out most weeks. Seventy per cent. of them had periods of real anxiety, 63 per cent. lacked a complete standard set of clothing and, when interviewed, 56 per cent. were in debt. Perhaps the Minister will say whether any of his proposals do anything to alleviate such problems and anxieties. I suspect that probably they do not.
The real intention behind the resolution and the Bill is to save public money at the expense of the poorest people, not to eliminate poverty as it should be. Politically, one may say that the Government are incredibly stupid or shortsighted, or that they simply do not care about the poorest people living in inner city areas.
In my constituency there are a number of social security offices. The two largest are based at Archway tower covering the Finsbury Park and Highgate areas. Jointly there are 38,000 claimants in those two offices. Most of them will suffer from the Government's proposals. Many more people will be forced to pay 20 per cent. of the rates which are high in London due to Government cuts in rate

support grant and rate capping. The number of people affected in many of our inner city areas is about one third to one half of the population of those areas. That is the magnitude of the Government's attack on social security.
There are a number of matters to which I wish to refer which I believe come within the ambit of the money resolution. The first relates to income support. The childless long-term unemployed are excluded from income support. The loss of additional requirements means additional hardships for them with regard to heating and special diets.
There is a serious discrimination against the functionally disabled. I do not think that the Secretary of State addressed himself to that issue during his introduction of the Bill or in any of his numerous publications in support of the proposal. I am worried about the further deterioration which arises from the family credit scheme. A notional sum is included to replace free school meals. As a result, those currently eligible, whilst in receipt of family income supplement, will no longer benefit from free school meals. A survey of charges shows that they vary from £1·75 to £4·75 per week. At current rates, a £3 per week notional allowance would result in the loss of notional income of £1·75 per week per child in areas covered by those authorities with the highest meal charges. It would mean a loss for families in 61 of the 102 authorities surveyed. Moreover, it has been estimated that children in more than 100,000 families would lose the benefit of free or subsidised meals.
The effect of the legislation goes in many directions. It is not just that the children will go without school meals; the school meals workers whose jobs depend on the number of children requiring school meals will lose their jobs. That is one reason why the National Union of Public Employees, the union that sponsors me in the House, is joining many other organisations in opposing this legislation.
The 20 per cent. of rates that will be charged to those in receipt of housing benefit is another problem. We are aware that the rates system is unfair. It is made much more unfair by the Government's rate-capping policy. Today's document does not hold out any hope for the people who live in areas that need the most public expenditure. They will have an added burden. I hope that we can consider these matters in the detail that they deserve in Committee.
I wish finally to mention the social fund and the way in which it will operate. The Secretary of State was unclear as to how the social fund will operate. He said that it will not be means-tested and that local offices will have discretion. If there is to be discretion over a means-tested and cash-limited fund, how on earth will it operate if it is to mean anything? The Secretary of State should be clear about the fund. It is designed to create an intimidatory atmosphere in which claimants will not claim because they will be hauled before the local manager who will decide whether they are fit to claim benefit.
I do not know about other Members, but my blood ran cold when the Secretary of State said that he would pursue those people who could not pay for funerals as a charge against the estate. We are means testing the dead when they are in the ground. It is a most disgraceful proposal.

Mr. Tony Banks: Is my hon. Friend aware that, according to the Government's figures, in London there is about £100 million of benefit unclaimed every year? Would it not be better for the Government to


spend time and effort trying to raise the level of awareness of those who are entitled to claim rather than to attack those who are claiming?

Mr. Corbyn: Indeed, the GLC and other councils have done a great deal of work in getting people to claim in full the benefits to which they are entitled. Instead of receiving praise from the Government for telling people of their rights, they are told that they cannot do that and are threatened with legal action for trying to do it.
The Bill is, in many ways, a step backwards from all the legislation passed since 1945. It is being strongly opposed by pensioners' organisations, claimants' groups, trade unions and tenants' associations. Thousands of people who are directly affected are well aware of what is going on and will join in opposing the Bill. That opposition will continue and will grow.
In opposing the Bill, I do not defend the existing system, because I do not defend a system that makes it complicated for people to claim their benefits, where there are enormous queues, and there are problems of lost files, under-staffing and under-payment of staff in offices. I look forward to a social security system that is designed to eliminate poverty, not to return us to the era of the poor law and the means test, which is what the Bill is about.
The alliance parties call for an all-party consensus on this matter. There can be no all-party consensus because the Conservative party and now the alliance are determined to push the legislation through to make life worse for the poorest people, ignoring the problems of poverty, instead of promoting a campaign to eliminate it. Self-satisfied Members could walk for 20 minutes and see people sleeping rough in Waterloo station, and other stations. That is the degree of poverty and deprivation in London.
The Bill does nothing to eliminate poverty. [Interruption.] Conservative Members are stirring rather nervously now. They should go to Waterloo station and see the poor people who are sleeping there. They should see the degradation that has been forced on them by the Government's policies.
We shall fight this Bill all the way in Committee, and the next Labour Government will remove it in its entirety.

The Minister for Social Security (Mr. Tony Newton): Allowing for an interesting difference in style, the first and last contributions to this debate were in a sense almost identical. The hon. Members for Ross, Cromarty and Skye (Mr. Kennedy) and for Islington, North (Mr. Corbyn) both agreed that they did not like the present social security system or the Bill, and both agreed that they did not have the foggiest notion what to do instead.
The hon. Member for Ross, Cromarty and Skye started by saying that he was going to vote against the Money Resolution because he wanted more clarification of figures and details. He then perpetrated some of the worse waffle about pensions policies that I have heard for a considerable time. That takes some nerve. I should like to ask either of the alliance representatives—the hon. Members for Ross, Cromarty and Skye and for Roxburgh and Berwickshire (Mr. Kirkwood) what they mean by the reference in the reasoned amendment to increasing the state retirement pension in the context of SERPS.
I have yet to be persuaded that any alliance Member, including the right hon. Member for Plymouth, Devonport

(Dr. Owen), realises that the SERPS proposals do not immediately release a vast total of resources, because we are not tampering with people's immediate pension expectations. Hon. Members persistently talked about how modification of SERPS somehow unlocked a huge pot of gold that permitted an immediate increase in the basic retirement pension. Sooner or later, they will have to face up to precisely how they will pay for some of their commitments.
I refer hon. Members to paragraph 3.57 of the White Paper, and to the serious and important comments of my hon. Friend the Member for Broxtowe (Mr. Lester) about the earnings rule. Paragraph 3.40 makes it clear that the change in the earnings rule will be monitored and reconsidered in the light of experience of its operation. That reconsideration will embrace the point that my hon. Friend the Member for Broxtowe made about reducing the qualifying period for one year.
I shall not attempt to follow the hon. Member for Denton and Reddish (Mr. Bennett) down the track of talking about students, in that whatever else I say is in order on this money resolution. I find it difficult to believe that students are, because there is no provision in the Bill relevant to any of the points on which the hon. Gentleman touched. However, we think that he failed to give sufficient weight to the housing benefit disregard which is contained in the package and to the grant increase following from some social security proposals that we have made.
The most important point to come up in the debate was that raised by my hon. Friend the Member for Broxtowe, echoed in different language by a number of hon. Members, about the long-term unemployed. The evidence that simply being on benefit in the long term by itself creates additional needs is inconclusive. The need for long-term unemployed families with children is clear. That need is shown in all our surveys and is reflected in the family premium proposed in the income support scheme. That premium will produce average increases of £1·70 a week for lone parents arid £1·40 a week for couples with children.
I ask all those hon. Members who have referred to single payments in this context to reflect on the extent to which large numbers of families do not gain any benefit from the single payments system. That must be borne in mind. On the latest information we have, about two thirds of families with children, including lone parents, receiving benefit at the time of the survey had not received a single payment in the previous 12 months. A system of single payments which is as random and uncertain in its effect as that, and from which large numbers of families evidently receive no benefit, is not a sensible substitute for a clear, proper set of weekly benefit rates and our proposals for an improvement in those regular weekly benefit rates for families with children. That is a much more sensible way of ensuring that people can get the help we want them to have. We shall continue to proceed down that track.

Question put and agreed to.

Resolved,
That, for the purposes of any Act resulting from the Social Security Bill, it is expedient to authorise the following—

(1) the payment out of money provided by Parliament of—
(a) any sums payable by way of the following—

(i) income support;
(ii) family credit;


(iii) rate rebate subsidy;
(iv) rent rebate subsidy;
(v) rent allowance subsidy;

(b) payments by the Secretary of State into the social fund;
(c) any sum payable under the Act to a person whose entitlement to the sum depends on his being entitled or treated as entitled to a qualifying benefit payable out of money provided by Parliament;
(d) payments by way of adjustment;
(e) any sums falling to be paid by the Secretary of State under or by virtue of the Act by way of travelling expenses;
(f) any other expenses of the Secretary of State attributable to the Act; and

(g) any expenses of the Lord Chancellor attributable to the Act; and
(h) any increase attributable to the Act in the sums payable out of money provided by Parliament under any other Act;

(2) the charging on and payment out of the Consolidate Fund of any increase attributable to the Act in the sums to be charged on and paid out of that Fund under any other Act;

(3) the making of payments into the Consolidated Fund: and in this Resolution—

(a) 'Act', when not used in relation to any Act resulting from the Social Security Bill, includes an Act of the Parliament of Northern Ireland; and
(b) other expressions shall be construed in accordance with any Act resulting from the Social Security Bill.

Orders of the Day — London Regional Transport

The Minister of State, Department of Transport (Mr. David Mitchell): I beg to move,
That the draft London Regional Transport (Levy) Order 1986, which was laid before this House on 16th December, be approved.
At various times, those of us who follow these matters have heard much extravagant language used about the prospects for public transport in London. Enormous progress is being made by the professional management of London Regional Transport. This is a truth which the GLC has a record of seeking to obscure by inflammatory scare stories. I quote but a few:
Fares will increase by at least 25 per cent.
The end of the line for at least 33 stations and 34 bus routes.
Pensioners will lose their free passes.
To add insult to injury, this grossly misleading and expensive propaganda has been paid for at the expense of the ratepayer. The GLC has to date provided grants exceeding £1 million to its mouthpiece "Capital". I hope that our debate can be conducted in a more level-headed atmosphere.

Mr. Tony Banks: I congratulate the hon. Gentleman on his new-found responsibilities. Has he had a chance yet to ascertain by how much fares have increased since London Regional Transport took over London Transport?

Mr. Mitchell: I shall be delighted to deal with that point if the hon. Gentleman will allow me to develop the point I am seeking to make. I intend to come to his point.
The objectives for London Regional Transport of my right hon. Friend the Secretary of State were to secure a period of stability for LRT's management following the troubled years under the GLC. That stability is essential to permit LRT and the professionals who man it to root out inefficiencies in the organisation and provide a better service to the travelling public.
We asked LRT to reduce the unit costs of its business by at least 2·5 per cent. in real terms each year and to reduce its need for revenue support from the £190 million planned by the GLC to £95 million for 1987–88. To improve accountability, LRT was required to establish its underground and bus undertakings as separate limited companies and that was achieved in April 1985. We also gave the chairman the objective of establishing LRT's ancillary businesses as separately accountable units of management and of reducing costs by competitive tendering for services where that was a sensible course. We also made it clear that, while we wanted to ease the financial burden on London ratepayers and on the taxpayer by reducing the grant paid to LRT, that reduced total would support the programme of investment which was vitally needed to improve the quality of service to the customer and save costs in the longer term.
Services were to be matched to demand and fares to be kept broadly in line with prices generally and those charged on British Rail's commuter services in London. LRT was asked to pursue opportunities for better co-ordination of services with British Rail and to improve conditions for disabled travellers.
I greatly welcome, and I believe that the House welcomes, the excellent response which Dr. Bright and his

board have made to this challenge. They pointed the way forward in their statement of strategy published in June 1985. Their aim is to secure better services and an improved passenger environment at no real additional cost to passengers by reducing costs in all areas. I commend their strategy statement to the flouse. Hon. Members have also seen LRT's annual business plan for 1986–87 which places on record its performance over this financial year. I hope that the House found that and the plans for next year as encouraging as I do.

Mr. Simon Hughes: Will the Minister tell us how what he has just said accords with the view of the London regional passenger committee which, when commenting on bus services in the capital, said that demand has gone up while the frequency of service has gone down? The Minister will know that the costs have not gone down; they have gone up.

Mr. Mitchell: I will come to that point in a moment. However, matching the supply and demand in some areas means changing services, in some areas increasing them and in others reducing them but an efficient business is one which matches supply and demand as closely as possible. It would not run services for which there is not an adequate demand.
The business plan shows that next year LRT will need only £79 million in grant to support its revenues. That means that not only will it have bettered our target for subsidy by £16 million but also that it will do so a year early and after taking on responsibility from next April for funding dial-a-ride services for the disabled. That is an astonishingly good performance by LRT. Since it has been achieved—as I am about to describe—without massive increases in fares or cuts in services it represents an absolute vindication of our policies.
Cost-cutting is the key to LRT's success. Progress in securing greater efficiency in provision of services for the public has been excellent.

Mr. Nigel Forman: My hon. Friend mentioned dial-a-ride. Will he give a much needed reassurance to my constituents in the London borough of Sutton that the arrangements which have been made will not disadvantage them in terms of local government finance?

Mr. Mitchell: I can give my hon. Friend the assurance that he is seeking.
The reduction in real unit costs of 2·5 per cent. per annum which we set on the basis of the then current business plans was, at the time, a tough target. In fact, unit costs will fall by 6·4 per cent. on the buses and by 3·7 per cent. on the underground this year in comparison with 1984–85; and are planned to fall by another 4·4 per cent. overall next year. That demonstrates the strength and imagination of LRT's managerial approach. It has secured more efficient operating and engineering practices and it is pursuing economy and efficiency in the provision of its ancillary services through contracting out and other means.
What about the level of services? I am happy to say that LRT plans to maintain at least the overall level of bus services, and to respond to the rising patronage that it is attracting on the underground by increasing services by 3 per cent. next year. I am sure that the hon. Member for


Southwark and Bermondsey (Mr. Hughes) will join me in congratulating LRT particularly on increasing tube provision by 3 per cent. next year.

Mr. Tony Banks: Surely the Minister knows that since LRT has been responsible for London transport there has been a 3 million mile cut in bus routage. That is not an expansion.

Mr. Mitchell: As I said, it is important to match supply and demand. If there are services for which there is insufficient demand, it is right to reduce them, and if there are other services for which there is increased demand, it is right to increase the provision of services. That is exactly what LRT has been doing, which is why I can refer to increased provision for London tubes.
Last year Opposition Members made the most outrageous claims about loss of services for pensioners and cuts that would take place. I bitterly resent the way in which elderly people were needlessly frightened and used, in the worst sense of the word, by Opposition Members for their political purposes.
Investment will be increased. This year LRT expects to spend about £230 million on capital expenditure, towards which a grant of £193 million will be paid. Next year it plans to increase investment by £31 million, and our grant will also increase, by £23 million.
On the underground, the customer will see further modernisation of stations. Recently, I saw the proposals for Bank station, which are encouraging, and involve expenditure of £5 million. That will provide substantial improvements to a heavily used station. Passengers will also see work start on the new automatic ticketing system which will be in place by 1988. That will bring major benefits to passengers in terms of convenience and savings in cost.
The bus passenger will see the introduction of new vehicles better adapted for use by the disabled and designed to speed up services to passengers generally. I hope that that will be welcomed by hon. Members, as it will be by anybody who is unbiased and certainly by passengers. Further work is in progress to provide modern garages and efficient operational and engineering services, and to replace the present power generation for the underground by cheaper power from the national grid. So much for the sinister tales of London's public transport in decay.
With my full encouragement, LRT has been pursuing its statutory duty of seeking tenders for bus services which it considers appropriate for contracting out. London Buses Ltd., LRT's operating subsidiary, tenders for routes specified by LRT in competition with other operators. The first 12 routes were announced last April. The mileage operated increased overall by 2·5 per cent. and an annual saving of £750,000 million is expected on a subsidy bill of £4 million for these routes. The second tranche of 12 routes announced in December will see frequencies increased on three routes and maintained on the rest. Yet annual savings of £1 million are expected over those 12 routes. I am sure that the hon. Member for Newham, North-West (Mr. Banks) will be on his feet in a moment to welcome that.
Of the twenty-four routes so far put to tender, nine were retained by London Buses Ltd., nine were gained by subsidiaries of the National Bus Company and the

remaining six went to private operators. In this way the private sector is being given a fair chance, under competitive conditions, to enter the London bus market.
Like any other business, LRT has to adjust its prices in the light of inflation. But it has not been allowed the easy route to reduction in subsidy by real increases in fares. The 9 per cent. increase in January 1985 covered nearly two years and restored the fares to much the same value as after the previous change in May 1983. The January 1986 increase maintains them broadly at that level and leaves them lower than they were in real terms in 1981. Current fares represent excellent value for an improving quality of service. LRT has kept the increase in the cost of travelcards at less than the average, so building on their evident success.
As fares now stand, travellers are paying a realistic price for a good service. Passengers agree. Patronage is booming. Underground travel has grown by 8 per cent. since last year. The long-run decline in bus patronage is being arrested. Hon. Members may care to glance at the figures in paragraphs 1 and 2 in LRT's annual business plan where they will see the underlying stability in LRT's policy on fares.
That is the background to the levy order for 1986–87 which we are considering. The House will know that section 12 of the London Regional Transport Act 1984 empowers my right hon. Friend to make grants to support LRT's capital and revenue spending. Section 13 of that Act permits him to recover by a levy on London ratepayers up to two thirds of his spending on grants. This financial year we are paying £323 million in grant, and are recovering £212 million in the levy. That works out at 65·63 per cent. of the total grant, and it means a rate poundage of 10·8p in the pound. The remainder of the grant is funded by the taxpayer.
LRT's excellent performance means that for 1986–87 the grant need be no more than £295 million. That is the estimated grant mentioned in the draft order. We have decided to keep the proportions funded respectively by ratepayers and taxpayers the same as last year. It seems right that both should share the benefits of better management—professional management, I may add—in the proportion in which they have contributed. That consideration requires us to raise only £193·6 million from London ratepayers and we are able to reduce the rate poundage by just over a penny, to 9·79p in the pound. That is excellent news for the domestic and business ratepayer.
In sum, I have shown that the Government are delivering in full measure the promise of the policies which we put forward for LRT and I have no hesitation in commending the draft order to the House tonight.

Mr. Roger Stott: I congratulate the hon. Member for Hampshire, North-West (Mr. Mitchell) on his promotion to Minister of State, Department of Transport. I do that with all the sincerity that I can genuinely muster. I hope that he will enjoy it while he can because after the next election I hope to be taking the position from him; or perhaps my hon. Friend the Member for West Bromwich, East (Mr. Snape) will do that. We shall have to see.
The order gives power to the Secretary of State to precept the London boroughs in order to sustain the capital and revenue support for LRT. I hope that I shall not be using "extravagant language". I do not believe that the


GLC, in its campaign for the retention of London Transport, used extravagant language either. What we shall be doing this evening is using the correct and factual statistics that are to hand.

Mr. Matthew Parris: We were told in Standing Committee that 20 or 30 underground stations would be closed within a short time. If that was not extravagant language, I wonder what is.

Mr. Stott: I shall deal with some of these issues later. My hon. Friend the Member for West Bromwich, East was a member of that Standing Committee and made several statements in it which, sadly, have proven correct.
The 1984 Act gives the Secretary of State responsibility for judging what level of collective revenue and capital support should be given to LRT. This is one of the first occasions that the House has had to assess the role and financing of LRT since that Act came into operation. When the Bill was debated in the House, many of my hon. Friends, including my hon. Friend the Member for West Bromwich, East, told the Secretary of State that removing control from the GLC and putting it with a Government quango would result in a worse service. I am sorry to have to say that many of their predictions have come true, even in the short time since the legislation was enacted.
One of the main reasons for the deterioration in services is directly related to revenue support. In addition to the requirements laid down in the 1984 Act, the Secretary of State has to set LRT a series of objectives. One is that revenue support is to be reduced by £95 million by 1987–88. That compares with £190 million of revenue grants provided by the GLC during 1984–85. LRT has made it clear that it is determined to attain most of that £95 million reduction in the first year. That aim is a major determining factor of the strategy that it has adopted, and the strategy is one of cuts in services and cuts in jobs.
Broadly speaking, the savings are made by reductions in bus services on the assumption that bus use will decline by 2·5 per cent. during the next year. LRT staff are already admitting that there is little evidence of such decline. The latest figures show continuing growth. For example, bus passenger miles in the first quarter of 1985 were 9 per cent. higher than in the corresponding period of 1984. LRT is embarrassed by the number of passengers who want to travel by bus. Savings from reductions in services cannot be made without serious reductions in fares and revenue receipts.

Mr. Forman: Does not the hon. Gentleman realise that, if there has been an expansion of the number of passengers while, at the same time, the number of people employed has been reduced, that indicates a more efficient service which benefits the taxpayer and the ratepayer?

Mr. Stott: I shall deal with that intervention later.

Mr. Jeremy Hanley: When the hon. Gentleman deals with that matter, would he care to explain the fact that, between 1970 and 1982, under the GLC, passenger demand fell by 25 per cent.? Surely that is no great success story.

Mr. Tony Banks: That is because it was under Tory control most of that time, you see, ha, ha!

Mr. Stott: If the very efficient Hansard reporters caught that sedentary interruption from my hon. Friend. I need not answer the question.

It is important to consider these matters in the context of what they mean for those who pay to support the services. In the financial year 1984–85, when the GLC still had control of London Transport, London ratepayers contributed £280 million towards the running of London Transport. In the financial year 1985–86, they must pay an extra 35 per cent. as the bill increases to £281 million. They also have to pay increased fares and watch some of the capital's services decline.
The Government have deliberately chosen to bring about those increases. The Secretary of State for Transport has given himself the power to levy a rate on Londoners for LRT up to the maximum of two thirds of the total subsidy. In 1985, in the first year of operation, the Secretary of State had to decide what that levy should be. As the hon. Gentleman knows, the order shows the maximum.

Mr. David Mitchell: Will the hon. Gentleman at least have the courtesy to admit that, although there have been reductions in some services in some areas, there have been increases in others? That is a sign of an efficient matching of the market to the supply and provision of transport.

Mr. Stott: I do not accept the scenario that the hon. Gentleman has painted, and I shall deal with that matter later.
Another factor that has increased the burden on ratepayers is the outstanding debt for capital grants to London Transport that the Government left to the GLC. When the London Regional Transport Act was passed, in real terms London Transport was nationalised, but. the Government refused to take over the council's outstanding debts in respect of London Transport, and London ratepayers have had to meet the costs in the GLC's 1985–86 rate precept.
In the past year, London's bus services have suffered from a major programme of curtailment of routes. Reduction in frequency and the conversion to one-person operation has meant a serious loss of jobs. The Minister mentioned the separate London Bus Company, which has been created to run London's buses. It is clear that it has little real autonomy from LRT. During the past year we have seen a series of cuts in bus mileages. My hon. Friend the Member for Newham, North-West (Mr. Banks) drew the Minister's attention to the serious reductions in bus mileage during the period of LRT's existence.
Under the London Regional Transport Act 1984, subsidy to London Regional Transport is decided on by the Secretary of State, following consultation with the Treasury and, as he is doing now, he must seek Parliament's approval. Up to two thirds of the total is raised from the ratepayers of Greater London. The exact amount is specified in the order.
For 1986–87 the Secretary of State has set a total subsidy to LRT of £295 million of which 65·63 per cent. is to be levied from the ratepayers, amounting to a sum of £193·6 million which represents a rate of about 9p in the pound. The total grant for 1986–87 is slightly lower than it was for 1985–86—£323 million—as is the ratepayers' contribution. Since 1984–85, the last year under CiLC' control, the total cost has not reduced, despite the Secretary of State's comments inside and outside the House. The total cost of London Transport during 1984–85 was £249 million—16 per cent. less than the subsidy in 1986–87.


Let us consider the breakdown of the figures and the GLC budget for 1984–85. Revenue support stood at £190 million and debt charges were £59 million, making a total of £249 million. The LRT budget for 1985–86 is £323 million; in 1986–87, it decreases slightly to £295 million. Despite the fact that the costs at LRT have not declined since the GLC lost control, the quality of public transport has declined.
I have to declare an interest, because I use London Transport every day—

Mr. Forman: So do I.

Mr. Stott: I know that the hon. Member for Carshalton and Wallington (Mr. Forman) is the only Conservative Member who does not drive a car, and I accept with alacrity that the hon. Gentleman has as much right as I have to relay to the House our opinions about London Transport.
The quality of the service, in my view and that of my hon. Friends, has declined; there has been a 16 per cent. increase in fares, compared with 10 per cent. inflation during the same period, and a 2 per cent. cut in bus services, or an equivalent of 3 million bus miles. If one lives on one of those routes, the cuts will have a great effect, whether one lives on the outer rim of the city or in one of the inner areas. It is all very well to take buses off the road, but that does not help nurses to get to work early in the morning or late in the evening. We should provide a service for the people of the capital city.
Although fares have increased faster than inflation, LRT has declared that it does not intend to take the entire subsidy for 1986–87. It will hand back £16 million to the Government, leaving the revenue support at £79 million instead of £95 million. That reduction in revenue support represents bad value for money, because, according to London Transport's own estimates, every pound of subsidy forgone leads to £l·34 of missing benefits. That represents a total loss of about £21·4 million of benefits. According to the London Regional Transport Act, the £16 million does not go back to the ratepayers of London; it goes straight back to the Treasury. Therefore, the real share of the subsidy increase to the ratepayers of London is 69·4 per cent.
If LRT had not decided to forgo the £16 million, fares could have been held down, services could have been increased, or there could have been a combination of both.
A survey conducted for the GLC by the Harris Research Centre among a representative cross-section of Londoners asks the respondents to select their preferred way of using that £16 million surplus. They were given four possible options, and their transport, employment and financial needs were taken into consideration. Those options were: first, to hold down bus and underground fares; secondly, to increase bus and underground fares; thirdly, to reduce rates in London; and, fourthly, to reduce taxation throughout the country. The result of the survey was that 42 per cent. were in favour of the first option to hold down fares; 26 per cent. favoured increasing fares; 17 per cent. favoured reducing rates; and 15 per cent. favoured reducing taxes. More than two thirds of Londoners wanted the money that LRT was returning to the Treasury to be used to hold down fares, a popular process that they have enjoyed while the GLC has had control of London's transport.

Mr. Parris: I gather than one option on the opinion poll to which the hon. Gentleman referred was that the savings should be made available to taxpayers nationally. Did the people questioned in the poll include a sample of those taxpayers nationally, or were they all Londoners?

Mr. Stott: The poll was conducted among a representative cross-section of Londoners. While the hon. Member for Derbyshire, West (Mr. Parris) was asking that question, my hon. Friend the Member for Newham, South (Mr. Spearing) reminded me that unintentionally I may have misled the House when dealing with the second option in the poll. It was to increase services and the figure was 26 per cent. I may have been somewhat confused in the wording of the option.
The Minister referred to the expansion of the London underground. It is to the advantage of everybody in one of the greatest capital cities in the world that the underground system is improved, for many millions of people are readily accepting the usefulness of the underground service.
The Minister said that automatic ticketing would not come in until 1988. Earlier in the evening I could have taken him to Wesminster tube station, where he would not have found anybody selling tickets. People could ride on the trains, but they could not buy tickets. There is a shortage of staff, not only at Westminster but at tube stations throughout the capital city. Nor do the machines work.

Mr. Peter Snape: Millions of pounds in revenue is being thrown away, and the Minister knows it.

Mr. Stott: The Government propose to spend £2·5 million on trunk roads in London. I do not oppose the building of roads where there is a practical reason for building them. But the return on that type of expenditure, unless the Government are making some extremely optimistic assumptions, will be negative.

Mr. Hanley: May I correct the hon. Gentleman on that point?

Mr. Stott: No. The hon. Gentleman can make his own speech.
The option of the Labour party and of the controlling Labour group on the GLC would be to use the financial resources to provide an integral, decent public transport system in our capital city. The GLC was attempting to provide just that, and the Fares Fair scheme was a bold, Socialist initiative by the GLC which proved popular throughout London.
The people of London have been denied the bus service that that positive, bold initiative would have provided, because the Government, out of sheer spite, are getting rid of the GLC and are taking the running of London's transport away from elected London councillors and giving it to a Government quango.
Public opinion on transport will be put to the test when we take our campaign on to the streets of Fulham. The people there will have an opportunity to pass judgment on what the Government have done, not only to the GLC but in destroying a public transport service of which every Londoner could be proud.

Mr. John Wheeler: I join in congratulating the Minister of State on his appointment. I am sure that he will be in his office for some time to come and will enjoy every minute of it.
I assure the hon. Member for Wigan (Mr. Stott) that my constituents remember the activities of the GLC. They recall vividly the increase in subsidies in real terms, from £6·5 million to £369·8 million. The people of London paid for those subsidies through their rates, and I remember the anger and anxiety of my pensioners and others who had to foot the bill to pay for that expenditure. I remember too, that from 1970 to 1982 fares rose in real terms by 85 per cent. There was gross overmanning, gross inefficiency and gross political manipulation of the transport undertaking in the capital.
We must congratulate the chairman and the board of London Regional Transport on a great success story. By any standards, the success of the new management in improving the efficiency of the service is something about which we can all be proud. I know that the people of London are proud of it. It is particularly gratifying to know that capital investment has been increased to £200 million from the GLCs £155 million investment programme. It is good to know that in its second year the business plan envisages that service levels will be maintained on buses and improved on the underground. Investment will increase by a further £30 million and revenue subsidies reduced again from £130 million to £79 million.

Mr. Parris: The hon. Member for Wigan (Mr. Stott) said that there were no staff to sell tickets at Westminster underground station. I have just been over to check, and staff are selling tickets there.

Mr. Wheeler: I am grateful to my hon. Friend. Like most hon. Members on the Government side, he is a regular user of the transport system, and we know how good it is and how it has improved.

Mr. Snape: Will the hon. Gentleman accept from me, as someone who regularly uses Westminster tube station late at night, that on many nights of the week there is no one to sell tickets at the ticket office? Regularly after 8 o'clock in the evening, most of the machines there are switched off. Because of staff shortages, it is quite possible to travel for nothing. That is the wonderful management that the hon. Gentleman and some of his hon. and right hon. Friends, like the Minister, who rarely travels by public transport, are talking about.

Mr. Wheeler: At the end of the journey, the fare is collected.

Mr. Snape: No, it is not. There is no one there either.

Mr. Wheeler: Yes, it is.
Of the plans produced by the LRT, I particularly welcome the investment of £135 million in a new automatic ticketing system which will reduce costs and fraud. Any hon. Member who has seen the modern underground system in the Crown colony of Hong Kong will know how successful automatic ticketing can be, especially in transporting people more speedily.
I welcome the substantial investment and the investment of £16 million in new buses. That will produce employment for people elsewhere in the United Kingdom as well as producing new equipment and new standards of comfort that will be of immense benefit to people in

London as a whole. LRT has also managed to hold down fares. Although by last summer fares had been eroded by at least 20 per cent. in real terms since May 1981, the overall increases that took place with effect from 6 January this year were around 9 per cent. that is a commendable achievement.
I welcome the order and I particularly commend the professional management of LRT. I hope that my hon. Friend will convey to that management the congratulations of the House and its best wishes for continued success.

Mr. Simon Hughes: I too welcome the Minister to his new role. A belief was expressed by the hon. Member for Westminster, North (Mr. Wheeler) that his tenure of office in this Government was bound to be long. I do not think that has been recent experience, but we hope the Minister is able to enjoy getting his teeth stuck into the more senior position which he has just inherited.

Mr. Hanley: He did not inherit it; he earned it.

Mr. Hughes: Well, into which he stepped through his service previously as Under-Secretary.
We judge the performance of London Regional Transport principally by three tests. The first is what the Secretary of State told those of us who were in the House for the Second and Third Readings of the London Regional Transport Act 1984 and what he told us in Committee. I should like to remind the House of some of the phrases that he used during the passage of the Bill. On Second Reading, he said:
The Bill provides the opportunities. The securing of better value for money will be one of the first and most important tasks of the new chairman of LRT and his board. I shall look to the board to achieve this.
Later in the same speech he said:
In the longer term the level of fares will reflect the degree of success LRT has in cutting costs and improving efficiency. I see no reason why fares and charges should continue to outstrip the increase in prices generally, given the scope that there is in LRT for substantial cost savings." —[Official Report, 13 December 1983; Vol. 50, c. 860, 864.]
On Third Reading he said:
It is crucial that we get a better deal for travellers,"—
not for ratepayers—
and that is the prime objective of the exercise … I am also confident not only that travellers will see a steadily improving system in London but that that will be accompanied by a reduction in their rate bill."—[Official Report, 9 April 1984; Vol. 58, c. 109.]
That, as it were, was the prologue of the coming into force of LRT.
There are two other criteria by which I suggest to the Minister that we should properly judge LRT's achievement. I shall not paint a picture that is all one-sided. We have to use fair and objective criteria. One is the opinion of people who take an objective view and a professional interest in what goes on. My earlier intervention was from the same source, which I hope the Minister accepts is valid and honourable, the committee that was set up to look after the interests of passengers in London, the London regional passenger committee. I might point out that after much pressure from the Opposition in Committee the London regional passenger committee was improved so that it would have at least some accountability to consumes.
There will be agreement about some matters. The passenger committee has said that on the underground the


demand has gone up, services have improved and modernisation has also taken place. I commend that. Some stations are considerably more pleasant than they were a few years ago. But the same has not applied on the bus services. The committee says—and this is an objective test—that there has been a reduction in bus services so far despite increased demand. We know why demand has increased. I hope the Minister will accept that it is principally because of the increased number of passes and special concessions that people have been using the services more frequently. There is nothing wrong with passes; they are a good thing and they have encouraged demand. That is the result a couple of years on.
Perhaps the board did not foresee that demand would increase, but services have deteriorated both in bus mileage and in frequency and therefore in efficiency, reliability and acceptability. The figures have been confirmed by other interventions. Passenger miles, on the other hand, in the second quarter of 1984 were 579 million; in the second quarter of 1985 they were 584 million, with an annual total of 2,620 million in the first year and 2,670 million in the second year. But the services have gone down. The number of million bus miles travelled in London has been reduced.
I can then put the third criterion to the Minister for judging success, the criterion of a London Member of Parliament who has had many occasions to go to meetings, to deal with letters and to look at requests from constituents who cannot have the same level of service and the same convenience of travel now, in parts of my constituency and around, as they had one or two years ago. I want to give the Minister an example of the sort of thing that London Regional Transport certainly cannot be proud of.
There was a bus service round the Surrey docks, the P5. Surrey docks is a very isolated peninsula, away from the main travel routes. That service was, at the end of last year, reduced in the second of the LRT route revisions. there was no consultation process of the right length. The matter is now going to court because the consultation process promised did not take place. The result has been that, although immediately after the service was changed there was an effort to sustain the same level and reliability, it has dropped off considerably. People who have no other public transport at all, who have no easy access to the tube because the tube stations are quite a long way away, say regularly and in large numbers, at meetings to hundreds, rather than tens, of people, that they believe the service to be worse.
I do not say that that applies to all services. The Minister, of course, says that a good management should ensure that the service responds to demand. But there have been substantial—and this is the best interpretation—errors of judgment in assessing that demand, and substantial attempts to cut services before the need for them to exist has been assessed.
When the Minister next talks to LRT about its plans for the coming year—and obviously I have consultations both with my area manager in Selkent and the chairman and officers of the board of LRT—I ask him to undertake to talk to it about the things which are clear evidence of the valid discontent in areas of the capital about the way in which the cost-cutting exercise has

resulted in a service-cutting exercise, when the demand has been in the other direction. That is a serious complaint which reveals a lack of responsiveness to the consumer.
We know why it is possible for LRT not to be responsive: it is a Government body. It has no direct accountability. The people who run it do not have to stand for election. As was quite rightly pointed out in the sedentary intervention made in response to the question from the hon. Member for Richmond and Barnes (Mr. Hanley), the reality of 1980–81 was that the GLC elections for 1981 were fought largely on the issue of the transport policy of the Labour group, fighting for control at county hall. Its promises to use subsidies from the ratepayers generally were popular. It gained substantial support. The result, as the Minister knows, was that fares were held down below the level of inflation and, in many respects, people at least had the service near where they lived, even if there was not on occasions a massive demand for it; it was still needed by them, however big or small the demand.
It is no good saying to a community like that in Surrey docks two years ago, a few thousand people, "I am sorry, but there are not enough of you to justify a bus service", when there is no other public transport service available to that community.
It is unfair to believe that the policy of keeping fares down is incompatible with having support from the public and from the customer and with the increasing demand which is possible if one is then imaginative about the schemes, the passes and the general forms of service that are offered to the consumer.
My last point to the Minister, which I made to his predecessor, I make in part in a parochial way but also more substantially. Some of the complaints seem to be to do with the regular day-to-day management decisions of London Transport. They go something like this: if we had shorter routes, less delay would be caused by congestion. All the predictions are that our streets will be more congested, and we need to counter that in the planning of the routes of London Transport, and not allow delays to build up, which, unfortunately still occurs on some routes.
However, we need to concentrate on some of the more important capital investment to which the Minister pays so much attention, particularly in some of the areas that continue to be badly served by public transport. In Committee, the two priorities in capital investment terms were said to be improved services to Heathrow and improved services in the docklands. There has certainly been a movement in the case of the docklands light railway, but south of the river there has been little improvement, if any, in docklands. It is still the gap in the London Transport map.
I ask the Minister to take away from the debate a much less complacent attitude than that with which he came to it. People in London are not saying that it is a wonderful new service in all respects as the result of London Transport. More often than not they are saying—and I ask him to accept that I represent the views which I hear and the experiences which are relayed to me—that there is not as much control, the prices are going up and the bus services in general and in many specific cases are not being improved. That is not sufficient to make LRT anything like the success that the Minister's predecessor and the Secretary of State said it would be.

Mr. Jeremy Hanley: Contrary to the belief of many Opposition Members, the Conservative party believes that public transport is absolutely vital to the capital. It is vital as a service to those who need to use it, it is vital as a service to the economy of the whole region and it is vital as a service to those who ought to use it more. It is only by a professional service, by an attractive service and by a well-run commercial service—indeed, by a proper public service—that we can bring more people on to public transport which will help to reduce the already overburdened roads throughout the capital. The only way to reduce the terrible traffic conditions in London is by making public transport more attractive.
I well remember the Standing Committee in February 1984 when we discussed this subject. I well remember the scare stories put out by the Opposition. However, there is one important thing to remember about that debate in Standing Committee: what were the objectives of the London Regional Transport Act 1984?
London Transport was taken from the Greater London council, first, to restore a stable framework for public transport planning; secondly, to reduce unnecessary costs and provide better value for money for travellers, ratepayers and tax-payers; thirdly, to bring bus and underground services into the same policy framework as BR commuter services and to improve co-operation between the two; fourthly, to redirect resources to cost-saving investment; fifthly, to ensure fully professional management; and, sixthly, to encourage competition and contracting out.
Have those six objectives been achieved? The first—to restore a stable framework—has certainly been achieved by taking LRT out of the directly political arena. There are no political appointees there now.

Mr. Tony Banks: They are all political.

Mr. Hanley: They are there for quality. It is not jobs for the boys or jobs for the girls.
With regard to the second objective—reducing unnecessary costs—bus costs have gone down by 6·4 per cent. and the costs of running the tube by 3·7 per cent. No longer is LT a job-protection scheme; it is a service for the consumer. I cannot blame Opposition Members for wanting to keep LRT as a job-protection scheme.
Any party founded and funded by the unions has a duty to those unions. Now the duty is to the consumer, and not to those who work in the industry. LRT is now a partnership between the employees and the consumer. It is an organisation that runs with pride in itself and not embarrassment about the political kickbacks that occurred.
Bus and underground services have been brought into the same framework as British Rail. There is through-routeing and there are imaginative ticket schemes. The present system encourages people to use London's services. It is one of the London Regional Transport Act's great successes. People can now use public transport without unnecessary restrictive practices to make their journeys harder.
The fourth objective related to redirecting resources to cost-saving investment. We have already heard from my hon. Friend the Member for Westminster, North (Mr. Wheeler) of the increases in capital expenditure. Those increases are vast. There are new buses, stations and ticket

machines. Anyone who uses the underground system, as Conservative Members regularly do, will feel the pride that exists in the attractiveness of the underground stations, the new designs and the cleanliness which was never present in GLC days.
We have also ensured that there is a fully professional management. That has worked. London Regional Transport is no longer run by a bus driver who was promoted above his ability. It is run by a professional manager who has learnt how to drive a bus, and does so regularly, to find out about the problems of buses in London. That is the right way to run the system.
We have also encouraged competition and contracting out. Recent announcements are excellent for the consumer and for future competition.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) said that fares have gone up. It is always a sad reflection on those who are meant to lead the community that they tend to pick statistics to try to prove their own sectional point. [Interruption.] As an accountant, I hope that people will believe the statistics that I choose to quote. Since 1983 and the GLC fare rise of that year, fares have increased in line with inflation. The plea of Opposition Members was that fares should not rise by more than inflation. Fares are now 87·2 per cent. of what they were in May 1981. That means a reduction of 12 per cent. since then.

Mr. Simon Hughes: The hon. Gentleman cannot believe that he is proving his case with those figures. He is well aware that between 1981, when the GLC went into Labour control, and 1984, when it went out of its control, fares hardly increased. In the past two years they have increased by 15·1 per cent. That is considerably more than inflation since LRT took over. Please let the hon. Gentleman be honest with the House if he is trying to prove that he is an accountant.

Mr. Hanley: By last summer, LRT fares had been eroded by about 20 per cent., in real terms, compared with their May 1981 values. The recent increase was 9 per cent. Therefore, overall there has been a 12 per cent. reduction in real terms since 1981.

Mr. Stott: It is essential to have this matter correct. The figure to which the hon. Gentleman referred—the increase that took place in January when we all returned to the House of Commons and found that bus and underground fares had been increased—was an increase of 6·5 per cent. Inflation at that time was 4·5 per cent. Fares have increased above the level of inflation.

Mr. Hanley: Let us look at the facts put out by the Opposition. Many Conservative Members remember the scare stories that were put out, not just in Standing Committee in February 1984 but in printed leaflets funded by the GLC. The scare stories were funded by the rates. A GLC-funded body, Capital, a so-called voluntary body, raised rates being spent involuntarily on a body which could not survive voluntarily if it tried. It produced leaflets and distributed them on buses, and I received them myself on the day of a lobby here at the House of Commons. It said that 20 to 30 tube stations would close within one year of the LRT Bill coming into force, and that a sixth of the bus routes would be withdrawn and not replaced.
The hon. Member for Newham, North-West (Mr. Banks) remembers very well a poster which I brought to


his attention, saying "Come on in No. 9, your time is up." The No. 9 bus runs through the centre of my constituency. Many people use it every day. For posters to say that that service would be withdrawn was a wicked lie. When I said to the hon. Member for Newham, North-West, "The No. 9 bus service I hear will not be withdrawn. Why did you choose that poster?", he replied, "We didn't mean it literally. We had to choose some number."

Mr. Tony Banks: The hon. Gentleman should have referred to the No. 172, because that was the route that went.

Mr. Hanley: The only reason why the Advertising Standards Authority did not discuss that poster campaign was that political advertising was not covered by the legislation.
I also remind the House of the scare campaign directed at the disabled and elderly to the effect that the concessionary fares would be taken away. For the first time under this Government, concessionary fares have been protected in statute—the complete reverse of what the GLC was trying to put out at ratepayers' expense. I pay fulsome tribute to the board and chairman of London Regional Transport, and to the chairman and managing director of London Bus Company whom I have always found to be responsive to the needs of bus passengers in my constituency.
Mr. Telford Beasley has driven a bus through some of the problem spots of London, and has learnt by looking at the areas that I have brought to his attention. He has always been sensitive to any requests for services which are not being supplied currently. That is imaginative and flexible management, and it can exist in a free society but not under political control.
If the people of London believe posters and stories put out in February 1984 which were created by politically motivated lies, all I say is that those posters, that scare campaign, and those leaflets have been proved to be untrue. I believe that all of the scare stories we have heard tonight will be proved to be untrue in the future.

Mr. Nigel Spearing: If the hon. Member for Richmond and Barnes (Mr. Hauley) thinks that control by the Under-Secretary of State or the Secretary of State is not political, there is something basically wrong with his constitution. Hon. Members representing the ratepayers of London are permitted to discuss London's transport affairs for one and a half hours a year. What wonderful democracy that is compared to what used to exist. The hon. Member for Richmond and Barnes should remember that when he talks to his constituents.
I have a Travelcard. With my muscles, it provides the only way I can get around London, as it does for the majority of my constituents. I hope to speak for the ratepayers of Newham, South and the rest of Newham—

Mr. Jeremy Corbyn: And Islington.

Mr. Spearing: And the whole of London. All hon. Members can do that.
On 13 January, the Minister of State said, to the surprise of the House, that the docklands light railway

—LRT is an agent of that railway—would be privatised and would never make a profit. Previously, the Secretary of State had said that public money would not provide an eastern extension to that much-needed form of public transport. The Government's attitude to London's public transport turns on private profits and investment-not by the community but by a private organisation which will make money out of the recently purchased royal dockyards, if it can, to the detriment of the rest of the Newham people. That is to Government's plan for the rest of London.

Mr. David Mitchell: The hon. Gentleman's constituents will agree with me, even if he does not, that developments with private capital in the docks area will bring a remarkable increase in prosperity that those constituents have not experienced for many years.

Mr. Spearing: The hon. Gentleman is not right. The mere fact that he is requiring private capital to carry the capital and revenue costs of such a development means that that development is much more likely to bring prosperity to bankers and property developers than to the people of Newham. The borough council does not agree with what is going on. The Government want to develop that area, and elsewhere in the docklands, not for the benefit of the people who live there or who use public transport to get there, but for the benefit of big City and international businesses. The Under-Secretary of State knows that very well.
In London Transport terms, there has been a remarkable turn-around. Until 1982, the number of passengers on buses and trains was decreasing. There has been a remarkable upsurge. From the base 100 in 1979, between 1982 and 1985 the number of rail passengers increased from 82 to 120 and bus passengers increased marginally from 87 to 96. The Conservative Government should not crow about that. What is the reason for the sudden and welcome increase in the number of passengers using public transport in London? The Travelcard has been responsible. It was introduced by the GLC when the Conservative party took office. That is the reason for the buoyancy in public transport.
Although bus passenger mileage has increased by a small amount, there have been major cuts. Efficiency has been increased, but only by causing inconvenience to the passenger. Costs have decreased—that might be welcome—but income has increased. That is the magic formula for fattening calves and chickens for killing. Those routes might be ripe for privatisation. That is the key to the Government's policy. The Government are already introducing their policy on the buses in outer London. They are trying to have super efficiency in the centre of London by getting rid of bus conductors. People in London want bus conductors to be retained, in central London at least.
Although there has been a welcome increase in passengers because of zoning and Travelcards, there have been anomalies, which should be cleared up. If people in my constituency wanted to travel from Green Gate to Plaistow station, it would cost them 30p for less than a mile. That is rather more than the equivalent Civil Service House of Commons car allowance for one person. Therefore, although I welcome the principle of Travelcards and zoning, there are anomalies inside that zone. There should be a much lower fare for people travelling over a shorter distance.


There is a bizarre problem illustrated by travel on the underground. If I and my hon. Friend the Member for Newham, North-West (Mr. Banks) wanted to go to the Home Office and it was raining and we did not have Travelcards we would go to Westminster underground station for St. James's park and we would have to pay 50p for half a mile. That is £1 each there and back and £2 for the two of us.

Mr. Parris: Use your Travelcard.

Mr. Spearing: Perhaps I should not use the example of my hon. Friend and I, because I am talking about ordinary people who do not have the benefit of their employers paying some of their travel expenses. They would have to pay £1 each there and back. It would be £2 for two of them which is a huge multiple of the cost of company cars or, in our case, the House of Commons travel allowance. Therefore, I support the Travelcard and zoning scheme for what it has done to produce a buoyant system, but for people travelling short distances in east London, Newham in particular, there are anomalies that need to be sorted out. There is a bizarre cost of 30p which applies for short distances between two adjacent stations in the outer London area. The cost per mile is bizarre relative to the cost of the transport provided.
The turn-around has been achieved only by GLC policies and the Government have reaped the benefit for the future. The Government are getting a public system of transport the profits of which they ultimately want to pay to private contractors. One might ask how that can be the case, because everybody knows that public transport, even in London, does not pay. The Government are doing that in the outer area on selected bus routes. What happens is that the service is subsidised by rates and transport supplementary grant and then the contractor is allowed to make the profit, just as the Government are allowing many contractors, instead of London Transport Building Services, to make profits. No doubt that is the case in all the reconstruction schemes we see around, where safety has been a problem. That is the plan for the future.
The Government do not worry too much about the quality of service. For example, the hon. Member for Richmond and Barnes knows that the Richmond service on a Saturday is every 20 minutes and that those trains are fairly full. That is not good enough. Central line tubes in east London in the evenings on the Newbury park branch in Redbridge—a Tory area—run every 20 minutes and they have escalators. That is not good enough. It shows a lack of sensitivity. Even reducing the interval to 15 minutes, let alone 10, would be a marginal cost to transport management, but they are snipping money wherever they can, irrespective of the convenience to the public.
Therefore, the improvements that have been brought about by a Labour-controlled GLC are now being used to prepare LRT services for privatisation. Why else would the Government split the buses and the railways into separate companies? It is all being produced over a period of time so that the next phase, no doubt with the enthusiastic co-operation of the non-political gentleman named by the hon. Member for Richmond and Barnes, will be to privatise what was a public asset, not for the benefit of the people of London, but for continuing the Leeds school of non-political economy—the social market philosphy of the Prime Minister. She should have paid

more attention to the views of her constituents because if she had, she would not be preparing LRT services for so-called profitable privatisation at the expense of the ratepayer.

Mr. Nigel Forman: The order and the speech of my hon. Friend the Minister show the solid progress now being made by the London Regional Transport, and I pay tribute to it. The order also gives the lie to the scurrilous GLC stories which were spread at the expense of ratepayers, including those in my constituency, because of contributions which they were obliged to make to the GLC.
I am glad that, through greater efficiency, LRT now provides better services at no discernible extra cost to the travelling public. That shows the wisdom and rightness of the Government's policy, flowing from the London Regional Transport Act 1984. It is especially good that the unit costs have been reduced by 6·4 per cent. on the buses, and 3·7 per cent. on the underground.
It is good for my constituents in Sutton that their position in relation to dial-a-ride is to be safeguarded All in all, a good story lies behind the order, which I support.
However, I have four suggestions for my hon. Friend the Minister which I hope will be drawn to the attention of the excellent new LRT management. First, I strongly agree with the hon. Member for Southwark and Bermondsey (Mr. Hughes) about the need for shorter bus routes. My constituents often find themselves at the end of such routes in the outer part of the greater London area, and the difficulties facing some of the hard-working drivers and staff are unavoidably increased by congestion The map of LRT's routes shows clearly that, unlike other metropolitan cities in advanced countries, we have inordinately long routes.
Bearing in mind the congestion problems, which have not been fully solved even by bulldog clamps, which I support, LRT should consider linking shorter routes.
Secondly, I welcome the progress made on the underground in creating cleaner, brighter tube stations. That is important psychologically, because it makes the travelling public feel better. More salient, in these days when people worry for their safety, it makes nervous people more confident if stations are well lit, clean and not covered in graffiti. LRT should spend small sums on improving the look and feel of tube stations.
Thirdly, as a frequent traveller on LRT and not owning a car, I am acutely aware of the deficiencies of the Circle Line. If a train is cancelled it invariably seems to be on the Circle Line rather than on the District or Metropolitan Lines. During the rush hours it is sensible, if there is a staff shortage or an operating problem, to give priority to the radial lines. At other times when Members of Parliament, tourists and others use the trains, it is important that the integrity and reliability of the Circle Line service is preserved. It pains me when I and others must wait about 20 minutes between Circle Line trains because one has been cancelled. Half the point of the tube service is its convenience.
Finally, I want to congratulate LRT on it brave decison to ban smoking from the underground. I declare an interest in that I am an aggressive non-smoker, but even allowing for that foible, on health and cleanliness grounds and the general acceptability of the environment underground, quite apart from on safety grounds and the danger of fire,


LRT has led the way splendidly. I hope that it will extend the policy to the buses so that we do not have to have a lower deck where life is tolerable and a cancer deck upstairs. We should have smoke-free buses for the sake of common sense and health.
This is an excellent sign of progress for LRT and I commend my hon. Friend the Minister on his efforts to push LRT in the right direction.

Mr. Deputy Speaker (Mr. Harold Walker): Mr. David Mitchell.

Mr. Harry Cohen: On a point of order, Mr. Deputy Speaker. The Minister has already addressed the House once and must ask the leave of the House in order to do so again. In the circumstances, I would object to that.

Mr. Deputy Speaker: The Minister does not need the leave of the House. I thought that the House wanted a reply from the Minister. The debate must finish at 12.41 am. I assumed that the House wanted to hear the Minister's reply to the debate. Mr. David Mitchell.

Mr. David Mitchell: If the hon. Member for Leyton (Mr. Cohen) feels that he has been cut out, and if you will allow me to split the time with him, Mr. Deputy Speaker, I am prepared to try to sum up in rather less time in order to meet the wishes of the House.

Mr. Tony Banks: rose—

Mr. Deputy Speaker: Mr. Tony Banks.

Mr. Banks: I shall split the time available with the Minister and I am grateful to him for that.
It is unfortunate that we have had a debate of one and a half hours yet some hon. Members still want to speak. This is what London Members now have as a substitute for the democratic accountability of the control of the GLC over the affairs of London Regional Transport.
A lot has been said about the GLC in an accusatory fashion by Conservative Members. Let me remind them that, under the control of the GLC from 1981, until London Transport was snatched back from the ratepayers of London in order for the Government to make a better case for the abolition of the GLC, the GLC kept fares down. Since LRT took control of London transport in 1984, the fares have gone up 16 per cent.
The GLC produced, as my hon. Friend the Member for Wigan (Mr. Stott) said, a radical blueprint for the future for the integrated transport system of London, dramatically increased public transort usage and, in doing so, reduced the level of traffic congestion on London roads and cut down on the number of road accidents.
In the final year when the GLC had London transport taken away from its democratic control, a £35 million operating profit was made by London Transport. That does not seem to me to be a record of which the GLC should feel ashamed. On the contrary, it seems to be a record of which the GLC and London ratepayers should feel proud. Since then, the record has been quite the reverse.
My hon. Friend the Member for Newham, South (Mr. Spearing) said that the sudden change in the fortunes of LRT, as Conservative Members see it, has not come about simply because of a new management structure. It has been the result of building on what the GLC established

by the new management of LRT. Incidentally, those managers were appointed by the GLC. I was a member of the committee that appointed Dr. Bright as the chairman of the executive. Frankly, that point should also be made by Conservative Members when they congratulate the management. We not only built the fare structure at county hall; we also appointed the managers to carry it out and they are the same ones who are here now.
We now find that LRT presents an annual plan. We have an hour and a half for people to rush in a few points. There is no consultation on the annual plan. No alternatives are put to the people of London and there is no real scrutiny. LRT's financial benefit derives from the 1983 Travelcard package, which the GLC introduced against the advice of and in opposition to the present senior management of LRT. LRT's success is entirely predictted on the successful policies of the GLC.

Mr. David Mitchell: I am sorry that the hon. Member for Newham, North-West (Mr. Banks) took rather more of the time than I suggested he could barely have.

Mr. Tony Banks: I am sorry.

Mr. Mitchell: That is perhaps a further illustration of the unreliability of some of the assertions made by Opposition Members.
The hon. Member for Wigan (Mr. Stott) said that many of his hon. Friends' predictions had come true. He failed to show where the 33 tube stations that it was predicted would close have closed. He failed to show where the 34 bus routes that it was predicted would close have closed. He failed to show where pensioners have lost their free passes, as was predicted. It is clear that the passengers of London are voting with their feet by using services more. LRT is now providing what passengers want at a fair price that passengers are prepared to pay. That is why more people are using its services. It is therefore clear that LRT is achieving what it was asked to achieve and what the people of London want from it.

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business):—

The House divided: Ayes 161, Noes 109.

Division No. 54]
[12.41 am


AYES


Adley, Robert
Bright, Graham


Alexander, Richard
Brinton, Tim


Amess, David
Brooke, Hon Peter


Ancram, Michael
Brown, M. (Brigg &amp; Cl'thpes)


Arnold, Tom
Bruinvels, Peter


Ashby, David
Bulmer, Esmond


Atkins, Robert (South Ribble)
Burt, Alistair


Baker, Nicholas (Dorset N)
Butcher, John


Baldry, Tony
Butterfill, John


Batiste, Spencer
Carlisle, John (Luton N)


Beaumont-Dark, Anthony
Carlisle, Kenneth (Lincoln)


Bellingham, Henry
Carlisle, Rt Hon M. (W'ton S)


Bendall, Vivian
Carttiss, Michael


Best, Keith
Cash, William


Bevan, David Gilroy
Channon, Rt Hon Paul


Biffen, Rt Hon John
Chope, Christopher


Blackburn, John
Clark, Hon A. (Plym'th S'n)


Boscawen, Hon Robert
Clark, Dr Michael (Rochford)


Bottomley, Peter
Coombs, Simon


Bottomley, Mrs Virginia
Cope, John


Bowden, A. (Brighton K'to'n)
Couchman, James


Bowden, Gerald (Dulwich)
Currie, Mrs Edwina


Brandon-Bravo, Martin
Dorrell, Stephen






Douglas-Hamilton, Lord J.
McCurley, Mrs Anna


Dover, Den
Macfarlane, Neil


Durant, Tony
MacKay, Andrew (Berkshire)


Dykes, Hugh
MacKay, John (Argyll &amp; Bute)


Evennett, David
Maclean, David John


Fairbairn, Nicholas
McQuarrie, Albert


Fallon, Michael
Major, John


Farr, Sir John
Malins, Humfrey


Favell, Anthony
Maples, John


Fenner, Mrs Peggy
Mather, Carol


Forman, Nigel
Maxwell-Hyslop, Robin


Forsyth, Michael (Stirling)
Mayhew, Sir Patrick


Forth, Eric
Merchant, Piers


Fowler, Rt Hon Norman
Meyer, Sir Anthony


Fraser, Peter (Angus East)
Miller, Hal (B'grove)


Freeman, Roger
Mills, Iain (Meriden)


Gale, Roger
Miscampbell, Norman


Galley, Roy
Mitchell, David (Hants NW)


Garel-Jones, Tristan
Moate, Roger


Gregory, Conal
Moore, Rt Hon John


Griffiths, Sir Eldon
Moynihan, Hon C.


Griffiths, Peter (Portsm'th N)
Mudd, David


Ground, Patrick
Neubert, Michael


Hamilton, Hon A. (Epsom)
Newton, Tony


Hamilton, Neil (Tatton)
Nicholls, Patrick


Hanley, Jeremy
Norris, Steven


Harris, David
Ottaway, Richard


Haselhurst, Alan
Page, Richard (Herts SW)


Hawksley, Warren
Parris, Matthew


Hayes, J.
Patten, Christopher (Bath)


Hayhoe, Rt Hon Barney
Pawsey, James


Hayward, Robert
Pollock, Alexander


Heathcoat-Amory, David
Portillo, Michael


Heddle, John
Powell, William (Corby)


Hickmet, Richard
Powley, John


Hind, Kenneth
Proctor, K. Harvey


Holland, Sir Philip (Gedling)
Raffan, Keith


Holt, Richard
Rathbone, Tim


Howard, Michael
Rhys Williams, Sir Brandon


Howarth, Alan (Stratf'd-on-A)
Ridley, Rt Hon Nicholas


Howarth, Gerald (Cannock)
Ridsdale, Sir Julian


Hubbard-Miles, Peter
Roe, Mrs Marion


Hunt, David (Wirral W)
Sackville, Hon Thomas


Hunt, John (Ravensbourne)
Shaw, Giles (Pudsey)


Jackson, Robert
Skeet, Sir Trevor


Jones, Robert (Herts W)
Thompson, Donald (Calder V)


Key, Robert
Thurnham, Peter


King, Roger (B'ham N'field)
Trippier, David


Knight, Greg (Derby N)
Twinn, Dr Ian


Knowles, Michael
Walker, Rt Hon P. (W'cester)


Lang, Ian
Wardle, C. (Bexhill)


Lawler, Geoffrey
Watson, John


Leigh, Edward (Gainsbor'gh)
Watts, John


Lennox-Boyd, Hon Mark
Wheeler, John


Lester, Jim
Wood, Timothy


Lightbown, David



Lilley, Peter
Tellers for the Ayes:


Lloyd, Peter (Fareham)
Mr. Francis Maude and


Lord, Michael
Mr. Tim Sainsbury.


Lyell, Nicholas





NOES


Adams, Allen (Paisley N)
Callaghan, Jim (Heyw'd &amp; M)


Archer, Rt Hon Peter
Campbell-Savours, Dale


Atkinson, N. (Tottenham)
Clarke, Thomas


Bagier, Gordon A. T.
Clay, Robert


Banks, Tony (Newham NW)
Clelland, David Gordon


Barnett, Guy
Clwyd, Mrs Ann


Barron, Kevin
Cocks, Rt Hon M. (Bristol S)


Beckett, Mrs Margaret
Cohen, Harry


Beith, A. J.
Conlan, Bernard


Bennett, A. (Dent'n &amp; Red'sh)
Cook, Frank (Stockton North)


Bermingham, Gerald
Cook, Robin F. (Livingston)


Boothroyd, Miss Betty
Corbyn, Jeremy


Boyes, Roland
Crowther, Stan


Bray, Dr Jeremy
Cunliffe, Lawrence


Brown, Gordon (D'f'mline E)
Dalyell, Tam


Brown, N. (N'c'tle-u-Tyne E)
Davies, Ronald (Caerphilly)


Bruce, Malcolm
Deakins, Eric


Caborn, Richard
Dewar, Donald





Dobson, Frank
Marshall, David (Shettleston)


Dormand, Jack
Martin, Michael


Dubs, Alfred
Maxton, John


Eadie, Alex
Meadowcroft, Michael


Eastham, Ken
Michie, William


Edwards, Bob (W'h'mpt'n SE)
Nellist, David


Evans, John (St. Helens N)
O'Brien, William


Ewing, Harry
O'Neill, Martin


Fatchett, Derek
Orme, Rt Hon Stanley


Fields, T. (L'pool Broad Gn)
Park, George


Fisher, Mark
Patchett, Terry


Flannery, Martin
Penhaligon, David


Forrester, John
Pike, Peter


Foster, Derek
Powell, Raymond (Ogmore)


Foulkes, George
Prescott, John


Godman, Dr Norman
Randall, Stuart


Golding, John
Redmond, Martin


Gould, Bryan
Richardson, Ms Jo


Hamilton, James (M'well N)
Rogers, Allan


Harman, Ms Harriet
Rowlands, Ted


Hart, Rt Hon Dame Judith
Silkin, Rt Hon J.


Hogg, N. (C'nauld &amp; Kilsyth)
Skinner, Dennis


Holland, Stuart (Vauxhall)
Smith. C.(Isl'ton S &amp; F'bury)


Hughes, Robert (Aberdeen N)
Spearing, Nigel


Hughes, Sean (Knowsley S)
Stott, Roger


Hughes, Simon (Southwark)
Strang, Gavin


Jones, Barry (Alyn &amp; Deeside)
Thomas, Dr R. (Carmarthen)


Lamond, James
Thompson, J. (Wansbeck)


Leighton, Ronald
Thorne, Stan (Preston)


Lewis, Terence (Worsley)
Tinn, James


Litherland, Robert
Wardell, Gareth (Gower)


Lloyd, Tony (Stretford)
Wareing, Robert


Lofthouse, Geoffrey
Welsh, Michael


Loyden, Edward
Winnick, David


McDonald, Dr Oonagh
Young, David (Bolton SE)


McKay, Allen (Penistone)



MacKenzie, Rt Hon Gregor
Tellers for the Noes:


Madden, Max
Mr Don Dixon and


Marek, Dr John
Mr. Frank Haynes.

Question accordingly agreed to.

Resolved,
That the draft London Regional Transport (Levy) Order 1986, which was laid before this House on 16th December, be approved.

Mr. Spearing: On a point of order, Mr. Deputy Speaker. You will recall that the Chair was put in some difficulty during the previous debate, and that the courtesy of the Minister of State, Transport allowed three, not two, Back-Bench Members of the Opposition from London to contribute to the debate. But for his courtesy, only two London Members of the Opposition would have been able to speak. In view of the importance of London Transport services, the money involved and the parliamentary democracy which Britain is fortunate to have. I must put it on the record that the time allowed for the debate was insufficient. I hope that those responsible will take note that that view was expressed not only by the Opposition, but by hon. Members on both sides of the House.

Mr. Tony Banks: rose—

Mr. Corbyn: rose—

Mr. Cohen: rose—

Mr. Deputy Speaker: Are these points of order on the same matter?

Mr. Banks: Further to that point of order, Mr. Deputy Speaker. I support my hon. Friend the Member for Newham, South (Mr. Spearing) in thanking the Minister for his courtesy in allowing me to grab slightly more than half of the remaining time when I rose. I would ask you,


Mr. Deputy Speaker, as the custodian of the rights of Back-Bench Members to represent their constituents' interests, to say that the time and opportunities for the scrutiny of London Regional Transport are grossly insufficient.
I am not altogether sure how you can assist us in this respect, but every London Back-Bench Member was either severely constricted in terms of the time available to speak or, in the case of some of my hon. Friends, was not allowed the opportunity to address the House. That is wholly unsatisfactory, and I would ask you, Mr. Deputy Speaker, to consider the points of order and see how you can help us to look after the affairs of London in terms of travelling on London Transport. It used to be done by the democratically elected councillors of the GLC.

Mr. Corbyn: rose—

Mr. Deputy Speaker: Is this exactly the same point of order?

Mr. Corbyn: My point of order is simply that, in one and a half hours, we have dealt with the transport affairs—

Mr. Deputy Speaker: Order.

Mr. Corbyn: I am just trying to make the point—

Mr. Deputy Speaker: Order. It is the same point that I have already heard from two hon. Members.

Mr. Cohen: On a point of order, Mr. Deputy Speaker. First, I wish to apologise for causing you difficulties with my point of order during the debate. But that difficulty arose because I had sat through the debate and tried to speak—I was one of three Labour Members who tried to do so—and was given no opportunity because of the shortage of time. What I wanted to put to you—

Mr. Deputy Speaker: Order. The hon. Gentleman is making the same point. I appreciate what hon. Members are saying and I sympathise with them, but the point that they are making is not one for me but for the procedures of the House. We have been following the procedures as laid down in the Standing Orders. If hon. Members are dissatisfied with those procedures, that is not a matter for me but, rather, for the Committee of Procedure and the House. Until the Standing Orders are changed, the Chair and the House must observe them.

Orders of the Day — Poverty (West Midlands)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]

Mr. Bob Edwards: I apologise to you, Mr. Deputy Speaker, and to the staff of the House for raising an issue at this late hour, but I have a duty to perform on behalf of the West Midlands county council and the citizens of the borough of Wolverhampton.
Representatives of county and borough councils from many parts of Britain came to the House last week to express distress about the rising plague of unemployment and poverty in their areas. I feel under an obligation to bring before hon. Members the issue that they raised when I presided over a meeting in this building.
In August 1985, supplementary benefit was paid in the county area of the west midlands to 353,949 people, an increase of 69 per cent. over December 1980. Since 1984, that number has increased by a further 7,744. Between July 1981 and July 1985, the proportion of long-term unemployed—those out of work for more than a year—in the west midlands has more than doubled. Two out of every five people in the area are living below the poverty line. Local services are experiencing increased pressure on their resources to the point of crisis.
Those were the major points that the representatives from the area raised with me. In other words, more than 1 million citizens in the west midlands now live on or below the poverty line.
I have been an hon. Member for 30 years. I remember when the economy of the west midlands was growing and when wages there were among the highest not just in Britain but in Europe. Today, the greatest concentration of low-paid workers in the United Kingdom is in the west midlands.
Unemployment and low wages create extensive health problems. particularly among mothers and wives, who bear a greater proportion of the burden than do their menfolk.
In Wolverhampton, 15 per cent. of the work force is currently employed in wages council industries where low wages are commonplace. Some 35,600 pensioners live in Wolverhampton, and 13 per cent. of them receive supplementary benefit. This month 7,375 pensioners living in council houses received housing benefit and 6,700 owner-occupiers received rate rebates. Some 11,983 children in Wolverhampton qualify for free school meals. Only 9,950 pay for school meals and the parents of many of those children are too proud to claim, although the children are qualified.
In Wolverhampton, 26,158 employable workers are unemployed. That is a rate of 19 per cent. compared with 16·7 per cent. in the west midlands county area, and 13·4 per cent. in the United Kingdom. There are 2,000 people on youth training schemes and 1,600 on community training programmes. Those people would accept employment if it was available, so they can also be regarded as unemployed. Some 52 per cent. of Wolverhampton's unemployed have been out of work for over a year, and have poor opportunities for employment.
The inner urban areas suffer from the highest unemployment. Eight Wolverhampton wards are among the worst of the 25 wards in the west midlands with unemployment of more than 20 per cent. of the


employable population. In my constituency four wards have a high percentage of unemployed people. In Ettingshall the figure is 27·8 per cent., Blakenhall 27 per cent., Bilston, East, 26 per cent., Bilston, North 22 per cent. and East Park 25 per cent.; and in St. Peter's ward, which is not in my constituency but in Wolverhampton and has the greatest concentration of ethnic minorities, the figure is 34 per cent. In another ward it is 50 per cent. That is again a ward with a high concentration of what are called black people. Those figures speak for themselves and to some extent highlight the special problems of black and young people in the inner city areas.
I know that quite a lot is being done and I welcome the Government's proposal to extend the youth training scheme by two years. I also welcome the fact that the west midlands is now eligible for regional development aid and can receive funds from the European Economic Community. We wonder why it was that last year, the first year in which the west midlands received regional development grants from the EEC, £7 million went to British Telecom. That was illegal because it would not qualify as an agent for such a grant when it was due for privatisation.
Furthermore, one of the conditions for a grant, based on the rules of the Community, is that the project should creat new jobs. The purpose of that grant, agreed by the Government, was not to create jobs but to rationalise communications. Rationalisation of communications is a good thing, but it puts people out of work. I do not know what justification the Government make for that grant to British Telecom.
I suppose that I should be more constructive because so far I have been critical. Pay is low in the west midlands and particularly in my constituency. Invariably, where there is low pay, there are high profits. Last year the 10 top profit-making companies in Britain made more than £0·75 billion. The profits of the five main companies with headquarters in the west midlands were Guest Keen & Nettlefold, £163 million; Cadbury-Schweppes, £172 million; Jaguar, £91 million; Birmid Qualcast, £12·8 million; and Lucas Industries, £70 million.
I repeat that where there are low wages there are high profits. Those great profits were sweated out of the toil and industrial intelligence of the workers in the west midlands but were not ploughed back in investment there. Most of the surplus was exported to Singapore, Hong Kong, Thailand and South Korea to establish industrial projects manufacturing goods to compete with the products which we used to export.
Massive development of the infrastructure is required. In 1979–80 expenditure on housing was 5·88 per cent. of public expenditure, but in 1984–85 it had declined to 1·98 per cent., a dreadful drop. If more were spent on housing, it would create jobs, improve the environment and give the opportunity of a decent, dignified life to people living in high flats and rotten slums that should be razed to the ground.
The Labour party, the Trades Union Congress and even the Confederation of British Industry all agree that improvement of the infrastructure is one way to develop the economy. Housing, the road network, hospitals, communication centres and research centres are all crying aloud for development. It is high time the Government did something to alleviate the dreadful poverty in many parts of the country and particularly in the west midlands.
In closing, I will be a little sentimental and will read a letter presented to me by an unemployed person. It is headed, "The torments and hardships of the victims of unemployment":
Unhappy when employer makes you redundant.
Nothing to look forward to for the future.
Evil—envious people talking and taking advantage of your circumstances.
Money not available for food when required.
Poverty taking hold of its victims.
Life—love life almost in ruins.
One chance in life to prove your ability or capabilities.
Young children crying with hunger because of delay in receiving benefit.
Man—pride and dignity taken from him.
Energy running out as costs rise higher.
No friends to ease the strain of your problems because rejected by society.
Tension rising higher as days and months go by.
These are experiences and facts as suffered by its victims, on behalf of victims of recession.
by patrick anthony friel.

The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): I accept the seriousness of the situation in the west midlands, and I understand the relationship of the speech of the hon. Member fcr Wolverhampton, South-East (Mr. Edwards) to the lobby which came here from his constituency and neighbouring regions. I have listened with interest to the points that he has made. He has ranged widely over the plight of his constituents, and certainly no one can have listened to the text of the letter which he read without a disturbing feeling of anxiety for the plight of the author and those like him.
Before I deal with the particular points that the hon. Member has raised, I should like to answer one point of which he very kindly gave me notice yesterday, regarding the European regional development fund payments. This is primarily a subject for my right hon. Friend the Secretary of State for Trade and Industry. If the hon. Member wishes, I will try to give him a fuller answer to the complaint that he made. It is, however, my understanding that British Telecom projects were at the time eligible for ERDF as a publicly funded infrastructure contributing to the development of the region. I agree with his point that it did not lead directly to jobs but, as I have said, telecommunications are part of the infrastructure. and this leads to the safeguarding of existing jobs and to the generation of a climate in which new jobs can be created.
Before I go on to the other points that he made, I would like to pay tribute to the hon. Gentleman. I am very conscious of the fact that he has represented Wolverhampton and Bilston in the House for over 30 years. He will have seen many Ministers come and go at the Dispatch Box. It is in the spirit of respect for his long service in this place that I respond to what he has said. His knowledge of the area and his sympathy with the frustration and hardship suffered by large numbers of his constituents cannot be doubted.
Although I cannot disagree that many people in the west midlands are suffering considerable hardship as a result of the recession and high unemployment, poverty is a relative matter, and we —like previous Governments —do not accept that a simple poverty line can be drawn. To use the supplementary benefit level as a definition of poverty must


be mistaken. Apart from anything else it would mean that whenever the benefit is increased in real terms, more people would be defined as being in poverty.
I am not denying the amount of genuine hardship that exists, particularly among the unemployed, and the hon. Member is perfectly right to draw attention to it. The problem of unemployment is one of the most serious facing not only this Government but Governments throughout the industrialised world. We, however, have suffered more than most because unemployment in this country has been rising for the past 20 years.
The west midlands—the black country in particular—has been particularly hard hit by market shifts. The root causes are familiar: the area has depended on traditional industries that have suffered setbacks in recent years—"metal bashing", heavy engineering and motor vehicles —industries that were overmanned, slow to change, and slow to adapt to new technology. There has had to be a fundamental shift from the old industrial pattern to new technologies such as electronics, and advanced manufacturing. It is particularly in those new technologies that hope for the future is to be found. Fundamental changes take time for their full effects on the local economy to be felt, but there are already a number of encouraging signs, and the region should not despise the expanding service sector as a source of jobs and wealth.
I do not wish to imply that manufacturing is of lesser importance, and it is encouraging that the downward trend in manufacturing employment has eased considerably since 1983. We need a prosperous and competitive manufacturing sector, but it is unrealistic to expect the share of manufacturing in total employment to return to the levels of the past. The whole direction of our policy since 1979 has been designed to reverse the long-standing deterioration in the competitiveness of our economy and to create the conditions in which enterprise, initiative and wealth creation can flourish. Manufacturing and service industries have responded well since the trough of the recession, but there are now five jobs in services for every two in manufacturing, and a substantial number of the new jobs created over the past two years have been in the service sector.
Despite difficult times, contracts are being won and new jobs are being created. I hope that the hon. Gentleman will think it only fair if I put some of these on the record. I must admit that I was rather taken aback when he told us of the profits that are being earned in his constituency and in the area, and to hear his accusation that these profits —he cited the companies, many of which are household names—are being sent abroad to Thailand where they will be used to start competing businesses. I do not know of any such instances. If he has further details, I hope that he will send me a note to enlighten me. As I say, I was quite unaware that any of the companies he mentioned were funnelling their profits directly out of the country in the manner he described.
GEC, Rugby, has won a £250 million contract to build a power station in China, and GEC Turbine Generators, Coventry, will carry out part of the work. Metro-Cammell at Birmingham won two major contracts in late 1985, one worth £65 million to build rolling stock for British Rail, and the second worth £22·5 million, from Hong Kong's mass transit railway corporation. British Leyland's Land

Rover UK has won a £70 million a year contract to sell four-wheel drive Range Rovers in the United States. The hon. Member will be interested to know that at 7 o'clock tomorrow morning I am catching a train to Birmingham, and I shall be visiting Land Rover and Range Rover in the morning. This contract will primarily benefit the Land Rover plant in Solihull and, if successful, could lead to new jobs. That is one of the matters I shall be discussing in the course of my visit.

Mr. Jim Callaghan: How many jobs will the contracts that the Minister has enumerated bring to the area represented by my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards)?

Mr. Clark: I cannot answer that, but I am interested to hear of these contracts, and it is one of the subjects about which I shall be seeking further information when I visit the factory tomorrow.
The new Guy Motors industrial park has opened in Wolverhampton on the site of the former British Leyland-owned Guy Motors. The park accommodates 28 small factory units, about half of which have already been let, and will create 140 jobs. Lucas Aerospace at Wolverhampton is reporting excellent growth in 1985, and increased orders for military and civil aircraft. Hundreds of jobs could be created in Walsall if a proposed £17 million shopping development and canalside marina goes ahead.
Unemployment in the region fell between December 1984 and December 1985, and unfilled vacancies increased by over 20 per cent. in the same period. Over 96,000 people were placed in work by the public employment service alone between April and December last year, and many more will have found jobs by other means.

Mr. Bob Edwards: There are 20 people chasing every job in the west midlands.

Mr. Clark: Yes, the hon. Gentleman makes his point again. The position remains serious, but I know that he would not wish to exclude the good news that I am reporting to the House. Unemployment is falling and unfilled vacancies have increased.
The growth of self-employment in the region is encouraging, especially since the west midland has traditionally depended on large employers. The latest statistics show 206,000 self-employed people in the region — 20 per cent. higher than three years earlier. The region's recovery is gradual, but we are seeing the beginnings of a welcome turnround in its fortunes.
I said earlier that we should not disregard the potential of the service sector. The west midlands contains well established tourist attractions, and existing transport links and available accommodation make Birmingham an ideal centre for conference tourism.

Mr. Edwards: Is that a substitute for manufacturing?

Mr. Clark: If it will generate the same level of prosperity and as many jobs, it is a substitute in the terms in which the hon. Gentleman addressed the House.
In 1984, 12 million visitors spent £440 million in the region, sustaining 65,000 jobs. About 85 per cent. of the employment is all year round, and three quarters full time. Day visits to and within the region accounted for further expenditure of about £300 million and employment for


20,000. Some estimates indicate that the opportunity exists to increase the annual value of tourism to the region by up to £150 million in 1990, creating as many as 15,000 new jobs. The hon. Gentleman was generous enough to acknowledge the level of regional aid which the Government have put into the region. I answered his point about the regional development fund grant for British Telecom.
The Government have a role in encouraging those positive changes. The severe economic problems of the region were recognised in November 1984 when the whole of the west midlands metropolitan county plus Kidderminster, Telford and Bridgnorth received assisted area status. Since then, the region has received offers of over £24 trillion by way of regional development grants. That money has helped create nearly 7,000 jobs and

safeguard some 8,000 existing ones. Wolverhampton alone has received offers of nearly £2·5 million, helping to create nearly 1,000 jobs and safeguard a further 100.
That represents an impressive amount of Government assistance. It is also Government assistance focused directly on job creation. The review of regional policy in 1984 led to a new system of regional aid focused on job creation rather than encouraging capital-intensive investment by companies which were not expanding their work force significantly. We also made some service sector activities eligible for regional aid for the first time. We ourselves cannot create the jobs that are needed in Wolverhampton and the west midlands, but through regional aid we can, and do, help the people of the west midlands attract investment which creates jobs.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past One o'clock.